2. Logan B. Taylor is a widower whose wife, Sara, died on June 6, 2018. He lives at 4680 Dogwood Lane, Springfield, MO 65801. He is employed as a paralegal by a local law firm. During 2020, he had the following receipts:

Salary $ 80,000 Interest income—

Money market account at Omni Bank $ 300 Savings account at Boone State Bank 1,100 City of Springfield general purpose bonds 3,000 4,400 Inheritance from Daniel 60,000 Life insurance proceeds 200,000 Amount from sale of St. Louis lot 80,000 Proceeds from estate sale 9,000 Federal income tax refund (for 2019 tax overpayment) 700 Logan inherited securities worth $60,000 from his uncle, Daniel, who died in 2020.

Logan also was the designated beneficiary of an insurance policy on Daniel’s life with a maturity value of $200,000. The lot in St. Louis was purchased on May 2, 2015, for $85,000 and held as an investment. As the neighborhood has deteriorated, Logan decided to cut his losses and sold the lot on January 5, 2020, for $80,000. The estate sale consisted largely of items belonging to Sara and Daniel (e.g., camper, boat, furniture, and fishing and hunting equipment). Logan estimates that the property sold originally cost at least twice the $9,000 he received and has declined or stayed the same in value since Sara and Daniel died.

Logan’s expenditures for 2020 include the following:
Medical expenses (including $10,500 for dental) $11,500 Taxes—
State of Missouri income tax (includes withholdings during 2020) $4,200 Property taxes on personal residence 4,500 8,700 Interest on home mortgage 5,600 Contribution to church (paid pledges for 2020 and 2021) 4,800 Although Logan and his dependents are covered by his employer’s health insurance policy, he is subject to a deductible and dental care is not included. The $10,500 dental charge was for Helen’s implants. Helen is Logan’s widowed mother, who lives with him (see below). Logan normally pledges $2,400 ($200 per month) each year to his church.
On December 5, 2020, upon the advice of his pastor, he prepaid his pledge for 2021.
Logan’s household, all of whom he supports, includes the following:
Social Security Number Birth Date Logan Taylor (age 48) 123-45-6787 08/30/1972 Helen Taylor (age 70) 123-45-6780 01/13/1950 Asher Taylor (age 23) 123-45-6783 07/18/1997 Mia Taylor (age 22) 123-45-6784 02/16/1998 Helen receives a modest Social Security benefit. Asher, a son, is a full-time student in dental school and earns $4,500 as a part-time dental assistant. Mia, a daughter, does not work and is engaged to be married.
Part 1—Tax Computation Using the appropriate forms and schedules, compute Logan’s income tax for 2020.
Federal income tax of $4,200 was withheld from his wages. If Logan has any overpayment on his income tax, he wants the refund sent to him. Assume that the proper amounts of Social Security and Medicare taxes were withheld. Logan received the appropriate coronavirus recovery rebates (economic impact payments); related questions in ProConnect Tax should be ignored. Logan does not own and did not use any virtual currency during the year, and he does not want to contribute to the Presidential Election Campaign Fund. Suggested software: ProConnect Tax.
Part 2—Follow-Up Advice In early 2021, the following take place:
• Helen decides that she wants to live with one of her daughters and moves to Arizona.
• Asher graduates from dental school and joins an existing practice in St. Louis.
• Mia marries, and she and her spouse move in with his parents.
• Using the insurance proceeds he received on Daniel’s death, Logan pays off the mortgage on his personal residence.
Logan believes that these events may have an effect on his tax position for 2021.
Therefore, he requests your advice.
Write a letter to Logan explaining in general terms the changes that will occur for tax purposes. Assume that Logan’s salary and other factors not mentioned (e.g., property and state income taxes) will remain the same.