Required information [The following information applies to the questions displayed below.] Diana and Ryan Workman were married on January 1 of last year. Diana has an eight-year-old son, Jorge, from her previous marriage. Ryan works as a computer programmer at Datafile Incorporated (DI) earning a salary of $98,500. Diana is self-employed and runs a day care center. The Workmans reported the following financial information pertaining to their activities during the current year. a. Ryan earned a $98,500 salary for the year. b. Ryan borrowed $12,500 from DI to purchase a car. DI charged him 2 percent interest ($250) on the loan, which Ryan paid on December 31. DI would have charged Ryan $770 if interest had been calculated at the applicable federal interest rate. Assume that tax avoidance was not a motive for the loan. c. Diana received $2,250 in alimony and $5,000 in child support payments from her former husband. They divorced in 2016. d. Diana won a $950 cash prize at her church-sponsored Bingo game. e. The Workmans received $750 of interest from corporate bonds and $500 of interest from a municipal bond. Diana owned these bonds before she married Ryan. f. The couple bought 60 shares of ABC Incorporated stock for $45 per share on July 2. The stock was worth $57 a share on December 31. The stock paid a dividend of $1 per share on December 1. g. Diana's father passed away on April 14. She inherited cash of $55,000 from her father and his baseball card collection, valued at $2,500. As the beneficiary of her father's life insurance policy, Diana also received $155,000. h. The couple spent a weekend in Atlantic City in November and came home with gross gambling winnings of $1,700. i. Ryan received $1,400 cash for reaching 10 years of continuous service at DI. j. Ryan was hit and injured by a drunk driver while crossing a street at a crosswalk. He was unable to work for a month. He received $7,000 from his disability insurance. DI paid the premiums for Ryan, but it reported the amount of the premiums as compensation to Ryan on his year-end W-2. k. The drunk driver who hit Ryan in part (j) was required to pay his $2,500 medical costs, $2,000 for the emotional trauma he suffered from the accident, and $6,000 for punitive damages. I. For meeting his performance goals this year, Ryan was informed on December 27 that he would receive a $5,500 year- end bonus. DI (located in Houston, Texas) mailed Ryan's bonus check from its payroll processing center (Tampa, Florida) on December 28. Ryan didn't receive the check at his home until January 2. m. Diana is a 10 percent owner of MNO Incorporated, a Subchapter S corporation. The company reported ordinary business income for the year of $102,000. Diana acquired the MNO stock two years ago. n. Diana's day care business collected $60,000 in revenues. In addition, customers owed her $5,500 at year-end. During the year, Diana spent $8,000 for supplies, $4,000 for utilities, $20,000 for rent, and $750 for miscellaneous expenses. One customer gave her use of his vacation home for a week (worth $5,000) in exchange for Diana allowing his child to attend the day care center free of charge. Diana accounts for her business activities using the cash method of accounting. o. Ryan's employer pays the couple's annual health insurance premiums of $8,000 for a qualified plan. 2. Complete page 1 of Form 1040 through line 9 and Schedule 1 for the Workmans (for filing MFJ). (Input all the values as positive numbers. Enter any non-financial information, (e.g. Names, Addresses, social security numbers) EXACTLY as they appear in any given information or Problem Statement. Do not skip rows, while entering in Deductions section of Form 1040 PG1.) Ryan address is 19010 N.W. 135th Street. Social security numbers: Ryan: 111-22-3333 Diana: 222-33-4444 Jorge: 333-44-5555 Check only one box. If you checked the MFS box, enter the name of your spouse. If you checked the HOH or QW box, enter the child's name if the qualifying person is a child but not your dependent. Your first name and middle initial Diana If joint return, spouse's first name and middle initial Ryan Home address (number and street). If you have a P.O. box, see instructions. 19010 N.W. 135th Street City, town, or post office. If you have a foreign address, also complete spaces below. Miami, FL 33054 Last name Workman Last name Workman Apt. no. State ZIP code Your social security number 222-33-4444 Spouse's social security number 111-22-3333 Presidential Election Campaign Check here if you, or your spouse if filing jointly, want $3 to go to this fund. Checking a box below will not change your tax or refund. Foreign country name Foreign province/state/county Foreign postal code You Spouse Yes No Someone can claim: At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency? You as a dependent Standard Your spouse as a dependent Deduction Spouse itemizes on a separate return or you were a dual-status alien Age/Blindness You: Were born before January 2, 1956 Are blind Spouse: Dependents (see instructions): (2) Social security number Was born before January 2, 1956 (3) Relationship to you Is blind (4) if qualifies for (see instructions): Child tax credit Credit for other dependents (1) First name Last name If more than four Jorge Workman 333-44-5555 Son dependents, see instructions and check here 1 Wages, salaries, tips, etc. Attach Form(s) W-2 Attach Sch. B if required. 2a Tax-exempt interest 3a Qualified dividends 4a IRA distributions 5a Pensions and annuities 6a Social security benefits 7 Capital gain or (loss). Amount Standard Deduction for- 8 Other income from Schedule 1, line 9 Single or Married 9 Add lines 1, 2b, 3b, 4b, 5b, 6b, 7, and 8. This is your total income filing separately, $12,400 Married filing 10 Adjustments to income: jointly or Qualifving From Schedule 1 line 77 1 2a 500 b Taxable interest. 2b 98,500 750 3a 60 b Ordinary dividends. 3b 60 4a 0 b Taxable amount 4b 0 5a 0 b Taxable amount 5b 0 0 b Taxable amount 6b 0 7 0 |102 | 8 9 99,310 Department of the Treasury Internal Revenue Service Attach to Form 1040, 1040-SR, or 1040-NR. Attachment Sequence No. 01 Go to www.irs.gov/Form 1040 for instructions and the latest information. Name(s) shown on Form 1040, 1040-SR, or 1040-NR Your social security number 5 6 7 8 9 0 Part I Additional Income 1 Taxable refunds, credits, or offsets of state and local income taxes 1 2a 2a Alimony received b Date of original divorce or separation agreement (see instructions) 3 Business income or (loss). Attach Schedule C 3 4 Other gains or (losses). Attach Form 4797 5 Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E 6 Farm income or (loss). Attach Schedule F 7 Unemployment compensation Other income. List type and amount 9 Combine lines 1 through 8. Enter here and on Form 1040, 1040-SR, or 1040-NR, line 8 Part II Adjustments to Income 10 Educator expenses 10 11 12 Certain business expenses of reservists, performing artists, and fee-basis government officials. Attach Form 2106 Health savings account deduction. Attach Form 8889 11 12 13 17 b 20 R 14 16 18a Moving expenses for members of the Armed Forces. Attach Form 3903 Deductible part of self-employment tax. Attach Schedule SE Self-employed SEP, SIMPLE, and qualified plans Self-employed health insurance deduction Penalty on early withdrawal of savings Alimony paid Recipient's SSN Date of original divorce or separation agreement (see instructions) IRA deduction Student loan interest deduction Tuition and fees deduction. Attach Form 8917 13 14 15 16 17 18a 19 20 21 Add lines 10 through 21. These are your adjustments to income. Enter here and on Form 1040, 1040-SR, or 1040-NR, line 10a 22