Note: This problem is for the 2021 tax year.
Beth R. Jordan lives at 2322 Skyview Road, Mesa, AZ 85201. She is a tax accountant with Mesa Manufacturing Company, 1203 Western Avenue, Mesa, AZ 85201 (employer identification number 11-1111111). She also writes computer software programs for tax practitioners and has a part-time tax practice. Beth is single and has no dependents. Beth was born on July 4, 1975, and her Social Security number is 123-45-6785. She did not engage in any virtual currency transactions during the year, and she wants to contribute $3 to the Presidential Election Campaign Fund. Beth received the appropriate coronavirus recovery rebates (economic impact payments); related questions in ProConnect Tax should be ignored.
The following information is shown on Beth’s Wage and Tax Statement (Form W-2) for 2021.
| Line | Description | Amount |
| 1 | Wages, tips, other compensation | $65,000.00 |
| 2 | Federal income tax withheld | 9,500.00 |
| 3 | Social Security wages | 65,000.00 |
| 4 | Social Security tax withheld | 4,030.00 |
| 5 | Medicare wages and tips | 65,000.00 |
| 6 | Medicare tax withheld | 942.50 |
| 15 | State | Arizona |
| 16 | State wages, tips, etc. | 65,000.00 |
| 17 | State income tax withheld | 1,954.00 |
During the year, Beth received interest of $1,300 from Arizona Federal Savings and Loan and $400 from Arizona State Bank. Each financial institution reported the interest income on a Form 1099-INT. She received qualified dividends of $800 from Blue Corporation, $750 from Green Corporation, and $650 from Orange Corporation. Each corporation reported Beth’s dividend payments on a Form 1099-DIV.
Beth received a $1,100 income tax refund from the state of Arizona on April 29, 2021. On her 2020 Federal income tax return, she used the standard deduction.
Fees earned from her part-time tax practice in 2021 totaled $3,800. She paid $600 to have the tax returns processed by a computerized tax return service.
On February 8, 2021, Beth bought 500 shares of Gray Corporation common stock for $17.60 a share. On September 12, 2021, Beth sold the stock for $14 a share.
On January 2, 2021, Beth acquired 100 shares of Blue Corporation common stock for $30 a share. She sold the stock on December 19, 2021, for $55 a share. Both stock transactions were reported to Beth on Form 1099-B; basis was not reported to the IRS.
Beth bought a used sport utility vehicle for $6,000 on June 5, 2021. She purchased the vehicle from her brother-in-law, who was unemployed and was in need of cash. On November 2, 2021, she sold the vehicle to a friend for $6,500.
During the year, Beth records revenues of $16,000 from the sale of a software program she developed. Beth incurred the following expenses in connection with her software development business.
| Cost of personal computer | $7,000 |
| Cost of printer | 2,000 |
| Furniture | 3,000 |
| Supplies | 650 |
| Fee paid to computer consultant | 3,500 |
Beth elected to expense the maximum portion of the cost of the computer, printer, and furniture allowed under the provisions of § 179. These items were placed in service on January 15, 2021, and used 100% in her business.
Although her employer suggested that Beth attend an in-person conference on current developments in corporate taxation, Beth was not reimbursed for the travel expenses of $1,420 she incurred in attending the meeting. The $1,420 included $200 for the cost of meals.
During the year, Beth paid $300 for prescription medicines and $2,875 for doctor bills and hospital bills. Medical insurance premiums were paid by her employer. Beth paid real property taxes of $1,766 on her home. Interest on her home mortgage (Valley National Bank) was $3,845, and credit card interest was $320. Beth contributed $2,080 in cash to various qualifying charities during the year. Professional dues and subscriptions totaled $350.
Beth paid estimated taxes of $1,000.
Required:
Compute Beth Jordan’s 2021 Federal income tax payable (or refund due), and complete her 2021 tax return using appropriate forms and schedules and the Qualified Dividends and Capital Gain Tax Worksheet.
- Make realistic assumptions about any missing data.
- If an amount box does not require an entry or the answer is zero, enter “0”.
- Enter all amounts as positive numbers, unless instructed otherwise.
- It may be necessary to complete the tax schedules before completing Form 1040.
- When computing the tax liability, do not round your immediate calculations. If required round your final answers to the nearest dollar.
- Use the 2021 Tax Rate Schedule provided. Do not use the Tax Tables.
Need help with line 2,3,7,16
| SCHEDULE D (Form 1040) Department of the Treasury Internal Revenue Service (99)Capital Gains and Losses ▶ Attach to Form 1040, 1040-SR, or 1040-NR. ▶ Go to www.irs.gov/ScheduleD for instructions and the latest information. ▶ Use Form 8949 to list your transactions for lines 1b, 2, 3, 8b, 9, and 10.OMB No. 1545-00742021Attachment Sequence No. 12Name(s) shown on return Beth R. JordanYour social security number 123-45-6785Did you dispose of any investment(s) in a qualified opportunity fund during the tax year? ◻ Yes ☒ NoIf “Yes,” attach Form 8949 and see its instructions for additional requirements for reporting your gain or loss. Part I Short-Term Capital Gains and Losses – Generally Assets Held One Year or Less (see instructions)See instructions for how to figure the amounts to enter on the lines below. (d) Proceeds (sales price) (e) Cost (or other basis)(g) Adjustments to gain or loss from Form(s) 8949, Part I, line 2, column (g)(h) Gain or (loss) Subtract column (e) from column (d) and combine the result with column (g)This form may be easier to complete if you round off cents to whole dollars.1aTotals for all short-term transactions reported on Form 1099-B for which basis was reported to the IRS and for which you have no adjustments (see instructions). However, if you choose to report all these transactions on Form 8949, leave this line blank and go to line 1b . . . . 1bTotals for all transactions reported on Form(s) 8949 with Box A checked . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Totals for all transactions reported on Form(s) 8949 with Box B checked . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Totals for all transactions reported on Form(s) 8949 with Box C checked . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4Short-term gain from Form 6252 and short-term gain or (loss) from Forms 4684, 6781, and 8824 . . . . .4 5Net short-term gain or (loss) from partnerships, S corporations, estates, and trusts from Schedule(s) K-15 6Short-term capital loss carryover. Enter the amount, if any, from line 8 of your Capital Loss Carryover Worksheet in the instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6() 7Net short-term capital gain or (loss). Combine lines 1a through 6 in column (h). If you have any long-term capital gains or losses, go to Part II below. Otherwise, go to Part III on the back . . . . . . . .7 Part II Long-Term Capital Gains and Losses – Generally Assets Held More Than One Year (see instructions)See instructions for how to figure the amounts to enter on the lines below. (d) Proceeds (sales price) (e) Cost (or other basis)(g) Adjustments to gain or loss from Form(s) 8949, Part II, line 2, column (g)(h) Gain or (loss) Subtract column (e) from column (d) and combine the result with column (g)This form may be easier to complete if you round off cents to whole dollars.8aTotals for all long-term transactions reported on Form 1099-B for which basis was reported to the IRS and for which you have no adjustments (see instructions). However, if you choose to report all these transactions on Form 8949, leave this line blank and go to line 8b . . . . 8bTotals for all transactions reported on Form(s) 8949 with Box D checked . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9Totals for all transactions reported on Form(s) 8949 with Box E checked . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Totals for all transactions reported on Form(s) 8949 with Box F checked . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Gain from Form 4797, Part I; long-term gain from Forms 2439 and 6252; and long-term gain or (loss) from Forms 4684, 6781, and 8824 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 12Net long-term gain or (loss) from partnerships, S corporations, estates, and trusts from Schedule(s) K-112 13Capital gain distributions. See the instrs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13 14Long-term capital loss carryover. Enter the amount, if any, from line 13 of your Capital Loss Carryover Worksheet in the instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14()15Net long-term capital gain or (loss). Combine lines 8a through 14 in column (h). Then, go to Part III on the back . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 BAA For Paperwork Reduction Act Notice, see your tax return instructions.Schedule D (Form 1040) 2021 |
| Schedule D (Form 1040) 2021Beth R. Jordan123-45-6785Page 2Part IIISummary16Combine lines 7 and 15 and enter the result . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16 If line 16 is a gain, enter the amount from line 16 on Form 1040, 1040-SR, or 1040-NR, line 7. Then, go to line 17 below.If line 16 is a loss, skip lines 17 through 20 below. Then, go to line 21. Also be sure to complete line 22.If line 16 is zero, skip lines 17 through 21 below and enter -0- on Form 1040, 1040-SR, or 1040-NR, line 7. Then, go to line 22. 17Are lines 15 and 16 both gains? ◻ Yes. Go to line 18. ☒ No. Skip lines 18 through 21, and go to line 22. 18If you are required to complete the 28% Rate Gain Worksheet (see instructions), enter the amount, if any, from line 7 of that worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .▶18 19If you are required to complete the Unrecaptured Section 1250 Gain Worksheet (see instructions), enter the amount, if any, from line 18 of that worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .▶ 19 20Are lines 18 and 19 both zero or blank and are you not filing Form 4952? ◻Yes. Complete the Qualified Dividends and Capital Gain Tax Worksheet in the instructions for Forms 1040 and 1040-SR, line 16. Don’t complete lines 21 and 22 below. ◻No. Complete the Schedule D Tax Worksheet in the instructions. Don’t complete lines 21 and 22 below. 21If line 16 is a loss, enter here and on Form 1040, 1040-SR, or 1040-NR, line 7, the smaller of: The loss on line 16; or($3,000), or if married filing separately, ($1,500)}. . . . . . . . . . . . . . . . . . . . . . . 21() Note: When figuring which amount is smaller, treat both amounts as positive numbers. 22Do you have qualified dividends on Form 1040, 1040-SR, or 1040-NR, line 3a? ☒Yes. the Qualified Dividends and Capital Gain Tax Worksheet in the instructions for Forms 1040 and 1040-SR, line 16. ◻No. Fill the rest of Form 1040, 1040-SR, or 1040-NR. |
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