Scenario 5 (Diego) Diego (32) is filing as a single taxpayer. He changed jobs during the year, and when he left his first job, he decided to take a distribution of funds from his 401(k). He used the funds to make a down payment on a new car. The taxable amount of this distribution, reported in box 2a of Form 1099-R, was $14,500. There was a code 1 in box 7 of the Form 1099-R. Diego was also the beneficiary of one of his great-grandmother's traditional IRAS. She passed away during the year, and Diego took a $2,000 distribution from the IRA. He used the money to pay down his credit card debt. As far as he knows, all of his great-grandmother's contributions to the account were deductible. This distribution was reported to him on a Form 1099-R with a code 4 in box 7. Diego's only other income during the year was $40,000 in wages. He will claim the standard deduction. Complete Schedule 2 (Form 1040). Additional Taxes, for Diego. You may also need to complete Form 5329. Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts. Then, enter the correct amounts on page 1 of Diego's Form 1040. It is not necessary to complete the entire Form 1040. You will need to refer to these forms to answer questions about this scenario in Part I of the Final Test