Self-Study Problem 2.2

Victor and Grace Alito received the following cash dividend and interest income during 2017:

	Received by
	Victor		Grace		Jointly
Dividends (all qualified for lower tax rates):
Apple Corp.	$275		$175
Pear Corp.					$ 450
Grape Inc.	450		300
Interest:
Mango Corporation Bonds			425
Quince Savings and Loan					2,150
U.S. Treasury Bonds					175
Nontaxable Distribution:
Kiwi Gas & Electric					875
Totals	$725		$900		$3,650

The Alitos, who file a joint return, have taxable income, including dividends and interest, of $40,000.

Complete Schedule B of Form 1040 and the Qualified Dividends and Capital Gain Tax Worksheet for the Alito's 2017 tax year.

Click here to access the tax tables.

SCHEDULE B (Form 1040A or 1040) Department of the Treasury Internal Revenue Service (99)	Interest and Ordinary Dividends Attach to Form 1040A or 1040. Go to www.irs.gov/scheduleB for instructions and the latest information.	OMB No. 1545-0074
		2017 Attachment Sequence No. 08

Name(s) shown on return Victor and Grace Alito			Your social security number
Part I Interest (See instructions and the instructions for Form 1040A, or Form 1040, line 8a.) Note: If you received a Form 1099-INT, Form 1099-OID, or substitute statement from a brokerage firm, list the firm's name as the payer and enter the total interest shown on that form.	1	List name of payer. If any interest is from a seller-financed mortgage and the buyer used the property as a personal residence, see the instructions and list this interest first. Also, show that buyer's social security number and address Mango Corporation Bonds		Amount
		Quince Savings and Loan
		U.S. Treasury Bonds	1
	2	Add the amounts on line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2
	3	Excludable interest on series EE and I U.S. savings bonds issued after 1989. Attach Form 8815 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
	4	Subtract line 3 from line 2. Enter the result here and on Form 1040A, or Form 1040, line 8a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
	Note: If line 4 is over $1,500, you must complete Part III.			Amount
Part II Ordinary Dividends (See instructions and the instructions for Form 1040A, or Form 1040, line 9a.) Note: If you received a Form 1099-DIV or substitute statement from a brokerage firm, list the firm's name as the payer and enter the ordinary dividends shown on that form.	5	List name of payer	5
		Apple Corp. (Victor Alito)
		Apple Corp. (Grace Alito)
		Pear Corp.
		Grape Inc. (Victor Alito)
		Grape Inc. (Grace Alito)
	6	Add the amounts on line 5. Enter the total here and on Form 1040A, or Form 1040, line 9a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
	Note: If line 6 is over $1,500, you must complete Part III.

	You must complete this part if you (a) had over $1,500 of taxable interest or ordinary dividends; (b) had a foreign account; or (c) received a distribution from, or were a grantor of, or a transferor to, a foreign trust.		Yes	No
Part III Foreign Accounts and Trusts (See instructions.)	7a	At any time during 2017, did you have a financial interest in or signature authority over a financial account (such as a bank account, securities account, or brokerage account) located in a foreign country?
		See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		If "Yes," are you required to file FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR), to report that financial interest or signature authority? See FinCEN Form 114 and its instructions for filing requirements and exceptions to those requirements . . . . . . . . . . . . . . .
	b	If you are required to file FinCEN Form 114, enter the name of the foreign country where the financial account is located . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
	8	During 2017, did you receive a distribution from, or were you the grantor of, or transferor to, a foreign trust?
		If "Yes," you may have to file Form 3520. See instructions . . . . . . . . . . . . . . .

For Paperwork Reduction Act Notice, see your tax return instructions.

Cat. No. 17146N

Schedule B (Form 1040A or 1040) 2017

Qualified Dividends and Capital Gain Tax WorksheetLine 44

Keep for Your Records

Before you begin:		See the earlier instructions for line 44 to see if you can use this worksheet to figure your tax.
		Before completing this worksheet, complete Form 1040 through line 43.
		If you do not have to file Schedule D and you received capital gain distributions, be sure you checked the box on line 13 of Form 1040.

1.	Enter the amount from Form 1040, line 43. However, if you are filing Form 2555 or 2555-EZ (relating to foreign earned income), enter the amount from line 3 of the Foreign Earned Income Tax Worksheet . . . . . . . . . . . . . . . . . . . (Taxable income) . . . . . . . . .					1.
2.	Enter the amount from Form 1040, line 9b* . . . . . . . . . . . . . . . .			2.
3.	Are you filing Schedule D?*
	Yes	Enter the smaller of line 15 or 16 of Schedule D. If either line 15 or line 16 is blank or a loss, enter -0-	}	3.
	No	Enter the amount from Form 1040, line 13.
4.	Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			4.
5.	If filing Form 4952 (used to figure investment interest expense deduction), enter any amount from line 4g of that form. Otherwise, enter -0- . . . . .			5.
6.	Subtract line 5 from line 4. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . .					6.
7.	Subtract line 6 from line 1. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . .					7.
8.	Enter:
	$37,950 if single or married filing separately,			}
	$75,900 if married filing jointly or qualifying widow(er),				. . . . . . .	8.
	$50,800 if head of household.
9.	Enter the smaller of line 1 or line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .					9.
10.	Enter the smaller of line 7 or line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .					10.
11.	Subtract line 10 from line 9. This amount is taxed at 0% . . . . . . . . . . . . . . . . . . . . .					11.
12.	Enter the smaller of line 1 or line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .					12.
13.	Enter the amount from line 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .					13.
14.	Subtract line 13 from line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .					14.
15.	Enter:
	$418,400 if single,			}	. . . . . . . .	15.
	$235,350 if married filing separately,
	$470,700 if married filing jointly or qualifying widow(er),
	$444,550 if head of household.
16.	Enter the smaller of line 1 or line 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .					16.
17.	Add lines 7 and 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .					17.
18.	Subtract line 17 from line 16. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . .					18.
19.	Enter the smaller of line 14 or line 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .					19.
20.	Multiply line 19 by 15% (.15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .							20.
21.	Add lines 11 and 19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .					21.
22.	Subtract line 21 from line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .					22.
23.	Multiply line 22 by 20% (.20) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .							23.
24.	Figure the tax on the amount on line 7. If the amount on line 7 is less than $100,000, use the Tax Table to figure the tax. If the amount on line 7 is $100,000 or more, use the Tax Computation Worksheet . . . . . . . . . . .							24.
25.	Add lines 20, 23, and 24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .							25.
26.	Figure the tax on the amount on line 1. If the amount on line 1 is less than $100,000, use the Tax Table to figure the tax. If the amount on line 1 is $100,000 or more, use the Tax Computation Worksheet . . . . . . . . .							26.
27.	Tax on all taxable income. Enter the smaller of line 25 or line 26. Also include this amount on Form 1040, line 44. If you are filing Form 2555 or 2555-EZ, do not enter this amount on Form 1040, line 44. Instead, enter it on line 4 of the Foreign Earned Income Tax Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .							27.
* If you are filing Form 2555 or 2555-EZ, see the footnote in the Foreign Earned Income Tax Worksheet before completing this line.