Question

Logan B. Taylor is a widower whose wife, Sara, died on June 6, 2017. He lives at 4680 Dogwood Lane, Springfield, MO 65801. He is employed as a paralegal by a local law firm. During 2019, he had the following receipts:

Salary				$ 80,000
Interest income—
Money market account at Omni Bank		$300
Savings account at Boone State Bank		1,100
City of Springfield general purpose bonds		3,000		4,400
Inheritance from Daniel				60,000
Life insurance proceeds				200,000
Amount from sale of St. Louis lot				80,000
Proceeds from estate sale				9,000
Federal income tax refund (for 2018 tax overpayment)				700

Logan inherited securities worth $60,000 from his uncle, Daniel, who died in 2019. Logan also was the designated beneficiary of an insurance policy on Daniel's life with a maturity value of $200,000. The lot in St. Louis was purchased on May 2, 2014, for $85,000 and held as an investment. Because the neighborhood has deteriorated, Logan decided to cut his losses and sold the lot on January 5, 2019, for $80,000. The estate sale consisted largely of items belonging to Sara and Daniel (e.g., camper, boat, furniture, and fishing and hunting equipment). Logan estimates that the property sold originally cost at least twice the $9,000 he received and has declined or stayed the same in value since Sara and Daniel died.

Logan's expenditures for 2019 include the following:

Medical expenses (including $10,500 for dental)				$11,500
Taxes—
State of Missouri income tax (includes withholdings during 2019)		$4,200
Property taxes on personal residence		4,500		8,700
Interest on home mortgage (Boone State Bank)				5,600
Contribution to church (paid pledges for 2019 and 2020)				4,800

While Logan and his dependents are covered by his employer's health insurance policy, he is subject to a deductible, and dental care is not included. The $10,500 dental charge was for Helen's implants. Helen is Logan's widowed mother, who lives with him (see below). Logan normally pledges $2,400 ($200 per month) each year to his church. On December 5, 2019, upon the advice of his pastor, he prepaid his pledge for 2020.

Logan's household, all of whom he supports, includes the following:

	Social Security Number	Birth Date
Logan Taylor (age 48)	123-45-6787	08/30/1971
Helen Taylor (age 70)	123-45-6780	01/13/1949
Asher Taylor (age 23)	123-45-6783	07/18/1996
Mia Taylor (age 22)	123-45-6784	02/16/1997

Helen receives a modest Social Security benefit. Asher, a son, is a full-time student in dental school and earns $4,500 as a part-time dental assistant. Mia, a daughter, does not work and is engaged to be married.

Federal income tax of $4,500 was withheld from his wages.

Required:

Compute Logan's income tax for 2019. If Logan has any overpayment on his income tax, he wants the refund sent to him. Assume that the proper amounts of Social Security and Medicare taxes were withheld. Logan does not own and did not use any virtual currency during the year, and he does not want to contribute to the Presidential Election Campaign Fund.

Please Complete a 2019 1040 Form for this problem.

Answer 1

	COMPUTATION OF INCOME TAX OF PERSON LOGAN
	PARTICULARS	AMOUNT($)	AMOUNT($)
	SALARY		80000
	INTEREST INCOME;
	BANK OMNI	300
	BANK BOONE STATE	1100
	City of Springfield general purpose bonds(1)	0	1400
	INHERITANCE (2)		0
	PROCEEDS FROM LIFE INSURANCE (3)		0
	SALE OF LOT HELD AS INVESTMENT (4)		-3000
	ESTATE SALE (5)		0
	FEDERAL INCOME TAX REFUND (6)		0
	ADJUSTED GROSS INCOE		78400
	ITEMIZED DEDUCTIONS FROM AGI (Greater than 24000 of standard deduction )
	MEDICAL TAX	5620
	STATE INCOME TAX	4200
	PROPERTY TAX	4500
	INTEREST ON HOME MORTGAGE	5600
	CHARITABLE CONTRIBUTIONS (8)	4800	24720
	TAXABLE INCOME		53680
	TAX ON TAXABLE INCOME OF 53680 BASED ON MARRIED FILING (9)		6060
	LESS: WITHHOLDINGS	4500
	LESS: DEPENDENT TAX CREDIT (10)	1500	-6000
	NET TAX PAYABLE		60
	Logan's tax on taxable income is $6060. But, he has to deduct the withholdings and dependend tax credit. So his net tax liability is $60 after these deductions.