Question

(1)Janice made a $6,000 contribution to her traditional IRA account. Her employer, Worldwide publishing, offers a 401k that Janice contributes to.

(2)Sale of LMN publically traded stock on 8/15/2019 for $11,000 (originally purchased for $4,000 on 1/15/2015)

(3)Sale of QRS publically traded stock on 10/15/2019 for $2,000 (originally purchased for $6,000 on 12/15/2018)

(4)Sale of a boat on 5/15/2019 for $10,000 used for personal recreation (originally purchased for $20,000 on 6/15/2014)

(5)Janice inherited publically traded stock worth $30,000 from a deceased uncle on September 30, 2019

(6)Immediately after receiving this stock, Janice sold it for $30,000. This stock was originally purchased by his uncle on January 15th, 2016 for $23,000

Prepare the 2019 Federal income tax return for Janice Morgan. It is required that you submit both the (1) tax return and a (2) brief explanation for each line item on the return.

Answer 1

Please refer below tax calculations and return for Janice Morgan and necessary explanation. While calculation tax return I have considered as Janice is indivisual and there is no dependant on him. Also salary details are not available hence salary has considered as zero.As per US Income tax rule there will be no tax payble if total income is less tha 40000 in a year.

In Janice case total income is less than 40000 hence no need to pay any tax to government.

Tax Return For Janice Morgan
Income from Salary	Remarks
Salary Received	$                     -	No Details are provided
Less Contribution for traditional IRA Account	$        6,000.00	As per provided details
Net Received (A)	$      (6,000.00)	Net Income / Loss from Salary	As Salary details are not available hence no tax calculation given.
Income from sales of stock
1- Sales of LMN Stock
Sales values of Stock	$      11,000.00	As per provided details
Purchase Values of Stock	$        4,000.00	As per provided details
Net Gain/ Loss in sale of stock (B)	$        7,000.00	Net gain in Sale of LMN Stock	There will be no tax on this capital gain. It is long teem capital gain due to holding period was more than 1 year. As total income is less than 40 K there will be no tax as per rules
2- Sales of QRS Stock
Sales values of Stock	$        2,000.00	As per provided details
Purchase Values of Stock	$        6,000.00	As per provided details
Net Gain/ Loss in sale of stock - (C )	$      (4,000.00)	Net gain in Sale of LMN Stock	There will be no tax on this capital loss. It is short term capital loss due to holding period was less than 1 year. As its loss hence will be knock off against next year short term capital gains.
3- Sales of Stock received from Uncle
Sales values of Stock	$      30,000.00	As per provided details
Value of stock at the time of received	$      30,000.00	As per provided details	As per rules value considered of stock basis current market rate.
Net Gain/ Loss in sale of stock (D)	$                     -	Net gain in Sale of LMN Stock	There is no capital gain or loss in this sale of stock.
Income from sales of Asset (Boat)
Purchase Values of Boat	$      20,000.00
1st Year Depreciation	$        3,000.00	AS per rules it is 15% of purchased values for 1st year
Reducing values of boat after end of 1st Year (1)	$      17,000.00	Purchase value - 1st year depreciation
2nd Year Depreciation	$        1,700.00	AS per rules it is 10% of decreased value till 7 years
Reducing values of boat after end 2nd Year (2)	$      15,300.00	Value 1 - 2nd year depreciation
3rd Year Depreciation	$        1,530.00	AS per rules it is 10% of decreased value till 7 years
Reducing values of boat after end 3rd Year (3)	$      13,770.00	Value 2 - 3rd year depreciation
4th Year Depreciation	$        1,377.00	AS per rules it is 10% of decreased value till 7 years
Reducing values of boat after end 4th Year (4)	$      12,393.00	Value 3 - 4th year depreciation
5th Year Depreciation	$        1,239.30	AS per rules it is 10% of decreased value till 7 years
Reducing values of boat at the time of sale (5)	$      11,153.70	Value 4 - 5th year depreciation
Sales value of boat	$      10,000.00	As per provided details
Net Gain / Loss in sale of boat (E)	$      (1,153.70)	Sales value - reducing value of boat	As reducing value of boat is greater than sale value there is loss in long term while sale of boat
Total Income from Salary (F)	$      (6,000.00)	Point A
Total Long term capital gain or loss (G)	$        5,846.30	Total of point A & E
Total Short term capital gain or loss (H)	$      (4,000.00)	Total of point C & D
Total Income for the year 2019	$      (4,153.70)	Total of point F, G & H