TEXTBOOK: INCOME TAX FUNDAMENTALS 2020 (38TH EDITION)

CHAPTER 4, END OF CHAPTER, COMPREHENSIVE PROBLEMS, EXERCISE 1:

Skylar and Walter Black have been married for 25 years. They live at 883 Scrub Brush Street, Apt. 52B, Las Vegas, NV 89125. Skylar is a stay-at-home parent and Walt is a high school teacher. His W-2 form is located on the next tab. Skylar's Social Security number is 222-43-7690 and Walt's is 700-01-0002. Neither are age 65 or older. The Blacks provide all the support for Skylar's mother, Rebecca Backin (Social Security number 411-66-2121), who lives in a nursing home in Reno, NV and has no income. Walter's father, Alton Black (Social Security number 343-22-8899), lives with the Blacks in Las Vegas. Although Alton received Social Security benefits of $7,600 in 2020, the Blacks provide over half of Alton's support. Skylar and Walt claim a $500 other dependent credit each for Rebecca and Alton.

Walt's earnings from teaching are included on the W-2 (see separate tab).

Walter's Forms W-2 and 1099-DIV The Blacks received the following 1099-DIV from their mutual fund investments: O CORRECTED (if checked) PAYER'S name, street address, city or town, state or province, 1a Total ordinary OMB No. 1545-0110 country, ZIP or foreign postal code, and telephone no. dividends Dividends $ 1,500.00 2020 and Cyber Equities Fund 41 Wall Street 1b Qualified dividends Distributions New York, NY 10005 $ 1,050.00 Form 1099-DIV 2a Total capital gain 2b Unrecap. Sec. 1250 distr gain $ 6,700.23 PAYER'S TIN RECIPIENT'S TIN 2c Section 1202 gain 2d Collectibles (28%) gain 17-1234326 222-43-7690vvalters forms VV-2 and 1099-DIV PAYER'S TIN RECIPIENT'S TIN 2c Section 1202 gain 2d Collectibles (28%) gain 17-1234326 222-43-7690 $ RECIPIENT'S name 3 Nondividend 4 Federal income tax distributions withheld Copy B Skylar B. Black $ For Recipient 5 Section 199A 6 Investment expenses dividends Street address (including apt. no.) $ This is important tax information and is being 7 Foreign tax paid B Foreign country or U.S. 883 Scrub Brush Street, #52B furnished to the IRS. If possession you are required to file a City or town, state or province, country, and ZIP or foreign postal return, a negligence code $ penalty or other 9 Cash liquidation 10 Noncash liquidation sanction may be distributions distributions imposed on you if this income is taxable and5 Section 199A 6 Investment expenses dividends Street address (including apt. no.) This is important tax information and is being 7 Foreign tax paid B Foreign country or U.S. 883 Scrub Brush Street, #52B furnished to the IRS. If possession you are required to file a City or town, state or province, country, and ZIP or foreign postal return, a negligence code penalty or other 9 Cash liquidation 10 Noncash liquidation sanction may be distributions distributions imposed on you if this income is taxable and Las Vegas, NV 89125 the IRS determines that $ $ it has not been reported. FATCA filing 11 Exempt-interest 12 Specified private requirement dividends activity bond interest dividends $ $ Account number (see instructions) 13 State 14 State 15 State tax withheld identification $ no Form 1099-DIV (keep for your records) www.irs.gov/Form 1099DIV Department of the Treasury - Internal Revenue ServiceWalter's earnings from teaching are: a Employee's social security number Safe, accurate, OMB No. 1545-0008 Is e ~ file Visit the 185 website at 700-01-0002 FAST! USC www.Is.gow cmc b Employer identification number (EIN) 1 Wages, tips, other compensation 2 Federal income tax withheld 31-1239867 54,300.00 4100.00 c Employer's name, address, and ZIP code 3 Social security wages 4 Social security tax withheld Las Vegas School District 54,300.00 3,366.60 2234 Vegas Valley Drive 5 Medicare wages and tips 6 Medicare tax withheld Las Vegas, NV 89169 54,300.00 787.35 7 Social security tips Allocated tips d Control number 9 10 Dependent care benefits e Employee's first name and initial Last Suff. 11 Nonqualified plans 12a See instructions for box 12 name C Walter Black DD 883 Scrub Brush Street, Apt. 528 $7,900.00 Las Vegas, NV 89125 13 Statutory Retirement Third-party 12b employee plan sick pay C 0 14 Other 12c CWalter's Forms W-2 and 1099-DIV e 12d C f Employee's address and ZIP code 15 State Employer's 16 State wages, tips, 17 State income 18 Local wages, tips, 19 Local income 20 Locality name state ID number etc. tax etc. tax NV Wage and Tax Department of the Treasury-Internal Revenue Service Form W-2 Statement 2020 Copy B-To Be Filed With Employee's FEDERAL Tax Return