Question

            Phil & Susan, each age 60, are married filing a joint return. They have no dependents. Susan has wages of $34,000. Phil doesn’t work due to a disability, but he’s a buyer and seller of stocks on the internet. The couple’s stock transactions for the year are detailed below.

They also had $2,300 of qualifying dividends.

Fill in the last 2 columns in the table below.

Security or fund*	Date acquired	Date sold	Cost	Sale price	Gain or loss	Long- or short term?
ABC	11/10/2018	3/12/2019	$3,000	$6,000
JCN	12/13/2017	5/23/2019	$36,000	$32,000
AWI	12/14/2014	7/14/2019	$13,000	$14,500
HDS	6/29/2018	5/18/2019	$26,000	$27,000
LBS	5/15/2018	10/18/2019	$67,000	$67,800
AEB	4/23/2017	10/8/2019	$89,000	$88,200
Net long term gains
Net short term gains

*All hypothetical stocks, bonds, or funds, not actual symbols.

Fill in relevant sections of the table below (selected parts of 1040 form)

Wages
3a. Qualified dividends		3b. Ordinary dividends
6. Capital gain (or loss)
7a. Other income from Schedule 1, Line 9
7b. Add lines 1, 3b, 6, and 7a. This is your total income
8a. Adjustments to income from Schedule 1, Line 22
8b. Subtract Line 8a from Line 7b. This is your Adjusted Gross Income (AGI)
9. Standard deduction		Assume itemized deductions are < standard deduction
10. Qualified business income deduction (assume = 0)
11a. Add together Line 9 and Line 10
11b. Subtract Line 11a from Line 8b. Tentative Taxable income
12a. Tax

Show your calculation of federal income tax below:

Answer 1

Calculation of Capital Gains/ Losses for the stocks sold :

Security or fund*	Date acquired	Date sold	Cost	Sale price	Period of Holding	Asset Type	Gain or loss	Long- or short term?
ABC	11/10/2018	03/12/2019	$ 3,000.00	$ 6,000.00	5 months	Short Term	$ 3,000.00	Short Term
JCN	12/13/2017	5/23/2019	$36,000.00	$32,000.00	17 months	Long Term	$ -4,000.00	Long Term
AWI	12/14/2014	7/14/2019	$13,000.00	$14,500.00	55 months	Long Term	$ 1,500.00	Long Term
HDS	6/29/2018	5/18/2019	$26,000.00	$27,000.00	11 months	Short Term	$ 1,000.00	Short Term
LBS	5/15/2018	10/18/2019	$67,000.00	$67,800.00	18 months	Long Term	$     800.00	Long Term
AEB	4/23/2017	10/08/2019	$89,000.00	$88,200.00	18 months	Long Term	$    -800.00	Long Term

Calculation of Federal Income tax :

Wages $34,000
3a. Qualified dividends : $2,300		3b. Ordinary dividends: NIL
6. Capital gain (or loss) : $1500
7a. Other income from Schedule 1, Line 9 : NIL
7b. Add lines 1, 3b, 6, and 7a. This is your total income : $35,500
8a. Adjustments to income from Schedule 1, Line 22	: NIL
8b. Subtract Line 8a from Line 7b. This is your Adjusted Gross Income (AGI) : $35,500
9. Standard deduction : $24,400		Assume itemized deductions are < standard deduction
10. Qualified business income deduction (assume = 0)
11a. Add together Line 9 and Line 10 : $24,400
11b. Subtract Line 11a from Line 8b. Tentative Taxable income : $11,100
12a. Tax : Qualified Dividends : 0% tax (since the total taxable income is less than $80,000) Tax on Tentative Taxable Income @10% = $11,100*10% = $1,110