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. 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 2019, 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:
A W-2 form shows details of Walter Black’s earnings and income tax withholdings for 2019. The form is divided into two Panels. The first panel contains a to f sections. It shows filled-in fields for the following: a. employee’s social security number: 700-01-0002 (highlighted), b. employer identification number (EIN): 31-1239867, c. employer’s name, address, and ZIP code: information about Las Vegas School District, e. employee’s first name, initial, and last name, and f. employee’s address and ZIP code. To be filled-in field in this panel is d. control number. The second panel contains 1 to 20 sections. It shows filled-in fields for 1. Wages, tips, other compensation: 51,200.00 (highlighted), 2. Federal income tax withheld: 4,310.00 (highlighted), 3. Social security wages: 51,200.00, 4. Social security tax withheld: 3,147.40, 5. Medicare wages and tips: 51,200.00, 6. Medicare tax withheld: 742.40, 12a. See instructions for box 12: DD, 7,900.00, 13. Retirement plan ticked, and 15. State: NV, employee’s state ID number. To be filled-in fields for this panel are: 7. Social security tips, 8. Allocated tips, 9, 10. Dependent care benefits, 11. Nonqualified plans, 12 b, 12 c, 12 d, 14. Other, 16. State wages, tips, etc., 15. State income tax, 18. Local wages, tips, etc., 19. Local income tax, and 20. Locality name. A foot note below the form reads, Form W-2 Wage and Tax Statement Copy B-To Be Filed With Employee’s FEDERAL Tax Return. This information is being furnished to the Internal Revenue Service. 2019. Department of the Treasury-Internal Revenue Service.The Blacks moved from Maine to Nevada. As a result, they sold their house in Maine on January 4, 2019. They originally paid $76,000 for the home on July 3, 1994, but managed to sell it for $604,000. They spent $13,000 on improvements over the years. They are currently renting in Las Vegas while they look for a new home.
The Blacks received the following 1099-DIV from their mutual fund investments:
An image shows the form 1099- DIV. The form is divided into two parts. The first part shows the following filled-in fields: Payer’s name, street address, city or town, state or province, country, ZIP, or foreign postal code, telephone no, and information about Cyber Funds Equities Fund; Payer’s federal identification number: 17-1234326; Recipient’s identification number: 222-43-7690; Recipient’s name; street address (including apt. no); city or town, state or province, country, and ZIP or foreign postal code. To be filled-in fields for this part are FATCA filling requirement (tick box), and account number (see instructions). The part two shows the filled-in fields for 1a.
Total ordinary dividends $1,425.00, 1b. Qualified dividends $ 1,002.00, and 2a Total capital gain distr., $ 6,540.34. To be filled-in fields are as follows: 2b Unrecap. Sec. 1250 gain, 2c. Section 1202 gain, 2d. Collectibles (28%) gain, 3. Nondividend distributions, 4. Federal income tax withheld, 5. Investment expenses, 6. Foreign tax paid, 7. Foreign country or U.S. possession, 8. Cash liquidation distributions, 9. Non cash liquidation distributions, 10. Exempt-interest dividends, 11. Specified private activity bond interest dividends, 12. State, 13. State identification no., and 14. State tax withheld. A note on the side of the form reads, Dividends and distributions, Copy B, For Recipient: This is important tax information and is being furnished to the Internal Revenue Service. If you are required to file a return, a negligence penalty or other sanction may be imposed on you if this income is taxable and the IRS determines that it has not been reported. A foot note below the form reads,
Form 1099-DIV; (keep for your records); www.irs.gov/Form1099DIV; Department of the Treasury - Internal Revenue Service.The Blacks own a ski condo located at 123 Buncombe Lane, Brian Head, UT 84719. The condo was rented for 185 days during 2019 and used by the Blacks for 15 days. The rental activity does not rise to the level to qualify for the QBI deduction. Pertinent information about the condo rental is as follows:
Rental income$12,100Mortgage interest reported on Form 10988,600Homeowners’ association
dues 5,200Utilities1,200Maintenance3,800Depreciation (assume fully depreciated)0The above amounts do not reflect any allocation between rental and personal use of the condo. The Blacks are active managers of the condo.
Required: Complete the Black’s federal tax return for 2019. Use Form 1040, Schedule 1, Schedule D, Form 8949, Schedule E (page one only), Form 8582 (page one only) and the Qualified Dividends and Capital Gain Tax Worksheet to complete their tax return.
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Although Alton received Social Security benefits of $7,600 in 2019, 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:
A W-2 form shows details of Walter Black’s earnings and income tax withholdings for 2019. The form is divided into two Panels. The first panel contains a to f sections. It shows filled-in fields for the following: a. employee’s social security number: 700-01-0002 (highlighted), b. employer identification number (EIN): 31-1239867, c. employer’s name, address, and ZIP code: information about Las Vegas School District, e. employee’s first name, initial, and last name, and f. employee’s address and ZIP code. To be filled-in field in this panel is d. control number. The second panel contains 1 to 20 sections. It shows filled-in fields for 1. Wages, tips, other compensation: 51,200.00 (highlighted), 2. Federal income tax withheld: 4,310.00 (highlighted), 3. Social security wages: 51,200.00, 4. Social security tax withheld: 3,147.40, 5. Medicare wages and tips: 51,200.00, 6. Medicare tax withheld: 742.40, 12a. See instructions for box 12: DD, 7,900.00, 13. Retirement plan ticked, and 15. State: NV, employee’s state ID number. To be filled-in fields for this panel are: 7. Social security tips, 8. Allocated tips, 9, 10. Dependent care benefits, 11. Nonqualified plans, 12 b, 12 c, 12 d, 14. Other, 16. State wages, tips, etc., 15. State income tax, 18. Local wages, tips, etc., 19. Local income tax, and 20. Locality name. A foot note below the form reads, Form W-2 Wage and Tax Statement Copy B-To Be Filed With Employee’s FEDERAL Tax Return. This information is being furnished to the Internal Revenue Service. 2019. Department of the Treasury-Internal Revenue Service.The Blacks moved from Maine to Nevada. As a result, they sold their house in Maine on January 4, 2019. They originally paid $76,000 for the home on July 3, 1994, but managed to sell it for $604,000. They spent $13,000 on improvements over the years. They are currently renting in Las Vegas while they look for a new home.
The Blacks received the following 1099-DIV from their mutual fund investments:
An image shows the form 1099- DIV. The form is divided into two parts. The first part shows the following filled-in fields: Payer’s name, street address, city or town, state or province, country, ZIP, or foreign postal code, telephone no, and information about Cyber Funds Equities Fund; Payer’s federal identification number: 17-1234326; Recipient’s identification number: 222-43-7690; Recipient’s name; street address (including apt. no); city or town, state or province, country, and ZIP or foreign postal code. To be filled-in fields for this part are FATCA filling requirement (tick box), and account number (see instructions). The part two shows the filled-in fields for 1a.
Total ordinary dividends $1,425.00, 1b. Qualified dividends $ 1,002.00, and 2a Total capital gain distr., $ 6,540.34. To be filled-in fields are as follows: 2b Unrecap. Sec. 1250 gain, 2c. Section 1202 gain, 2d. Collectibles (28%) gain, 3. Nondividend distributions, 4. Federal income tax withheld, 5. Investment expenses, 6. Foreign tax paid, 7. Foreign country or U.S. possession, 8. Cash liquidation distributions, 9. Non cash liquidation distributions, 10. Exempt-interest dividends, 11. Specified private activity bond interest dividends, 12. State, 13. State identification no., and 14. State tax withheld. A note on the side of the form reads, Dividends and distributions, Copy B, For Recipient: This is important tax information and is being furnished to the Internal Revenue Service. If you are required to file a return, a negligence penalty or other sanction may be imposed on you if this income is taxable and the IRS determines that it has not been reported. A foot note below the form reads,
Form 1099-DIV; (keep for your records); www.irs.gov/Form1099DIV; Department of the Treasury - Internal Revenue Service.The Blacks own a ski condo located at 123 Buncombe Lane, Brian Head, UT 84719. The condo was rented for 185 days during 2019 and used by the Blacks for 15 days. The rental activity does not rise to the level to qualify for the QBI deduction. Pertinent information about the condo rental is as follows:
Rental income$12,100Mortgage interest reported on Form 10988,600Homeowners’ association
dues 5,200Utilities1,200Maintenance3,800Depreciation (assume fully depreciated)0The above amounts do not reflect any allocation between rental and personal use of the condo. The Blacks are active managers of the condo.
Required: Complete the Black’s federal tax return for 2019. Use Form 1040, Schedule 1, Schedule D, Form 8949, Schedule E (page one only), Form 8582 (page one only) and the Qualified Dividends and Capital Gain Tax Worksheet to complete their tax return.
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