Question

Andi, age-79, is single and has no dependents. Andi had the following relevant transactions for 2019:

Social Security benefits for Andi                                                                       $19,000

Interest income from local bank                                                                              650

Qualified dividends                                                                                                   555

Loss on sale of Tandem Diabetic stock (held from

11/10/2017 to 10/31/2019)                                                                             -3,100

Federal income tax quarterly deposits (total)                                                     2,800

Itemized deductions                                                                                            7,925

Total Capital gain 30,378

                                                                                                         Single

                                                                                                        Family

RENTAL OPERATIONS                                                                   Home                 Duplex           

Rental income                                                                        $21,900               $29,200

Interest expense                                                                        8,800                 11,200

Property taxes                                                                           1,650                   6,366

Maintenance                                                                                  440                      560

Insurance                                                                                    1,260                   1.465

Depreciation-Building (Line 17, Form 4562)                          2,495                   2,845

Depreciation-Appliances (Line 17, Form 4562)                             0                           0

Complete a Form 1040 with the appropriate Schedules and Forms for 2019 for Andi.

Minimum forms required:

   Form 1040, Schedule 1, Schedule 3

   Form 1040, Schedule B, Schedule D, Schedule E.

   Form 4562, Form 4797, Form 8949 (Optional), Form 8995 (optional).

Hints:

• Claim the QBI deduction for the rentals.

This question is related to the tax return. Please help me to fill out the tax return forms. Which number goes where? Thank you

Answer 1

Andi Fauci, age-79, is single, and has taxable income, properly calculated, of $226,000. During the year, Andi completed transactions, including:

Qualified dividends555

Loss on sale of Tandem Diabetic stock (held from

11/10/2017 to 10/31/2019, Cost = $7,400)-3,100

SALE OF RENTAL RESIDENCE

Sales price (November 27, 2019)

Building $48,000

Land 72,000

Cost (October 18, 2010)

Land 38,000

Building 30,000

Depreciation allowed 8,998

SALE OF APPLIANCES WITH RESIDENCE

Sales price $ 5,500

Cost (October 18, 2014) 9,000

Depreciation allowed 6,880

Calculate Andi’s federal income tax for 2019.

You might consult Form 4797, as you will be asked to complete it as part of Tax Return 2.

Calculation of Capital Gains:

Qualified dividends $555

Sale of the residence (48,000-30,000+8,998) $26,998

Sale of the land (72,000-38,000) $34,000

Sale of the appliances (5,500-9,000+6,880) $3,380

Capital gain or loss (26,998+34,000-3,000(loss limitation)) $57,998

Taxable income $226,000

Net capital gains and dividends (57,998 +555) $58,553

Ordinary income (226,000-58,553) $167,447

Standard deduction $13,850

Remaining Taxable income will be (167,447-13,850) $153,597

Tax on ordinary income 14,382.50+24% (153,597-84,200) $31,037.78

Lesser of the two 25% or 24% (8,998*.24) $2,159.52

15% gain on 49,555 $7433.25

Total Income Tax will be (31,037.78+2,159.52+7433.25) $40,630.55

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