Tax Form/ Return Preparation Problem

Sally W. Emanual, a teacher, had the following dividends and interest during the current year

Acorn Corporation bonds interest $ 700

City of Boston bonds interest 1,000

Camp Bank interest 1,250

Jet Corporation dividend (qualified). 1300

North Mutual funds

Capital gain distribution 100

Ordinary dividend (qualified) 150

Nontaxable distribution 200 450

Blue Corporation foreign dividend 250

Additional information pertaining to Sally Emanual includes

Salary 70,000

Rent income 12,000

Expenses related to rent income 14,000

Pension benefits 7,000

Taxable alimony paid to Sally 4,000

The taxable portion of the pension is $7,000. Sally actively participates in the rental activity. Other relevant information includes Address: 430 Rumsey Place, West Falls, California 92699

Occupation: Credit manager

Social Security number: 123-45-6789

Marital status: Single

Complete Sallys Schedule 1, Schedule B and compute her taxable income on Form 1040. Assume Schedule E has already been prepared.

Explain each step.