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PLEASE HELP ME SOLVE THE INCORRECT ANSWERS MARKS RED.

Note: This problem is for the 2019 tax year.

Alton Newman, age 67, is married and files a joint return with his wife, Clair, age 65. Alton and Clair are both retired, and during 2019, they received Social Security benefits of $10,000. Both Alton and Clair are covered by Medicare. Alton's Social Security number is 111-11-1119, and Clair's is 123-45-6786. They reside at 210 College Drive, Columbia, SC 29201.

Alton, who retired on January 1, 2019, receives benefits from a qualified pension plan of $2,750 a month for life. His total contributions to the plan (none of which were deductible) were $168,250. In January 2019, he received a bonus of $2,000 from his former employer for service performed in 2018. No income taxes were withheld on this bonus by his former employer (Amalgamated Industries, Inc.; EIN 12-3456789; 114 Main Street, Columbia, SC 29201). Although Amalgamated Industries, Inc., accrued the bonus in 2018, it was not paid until 2019.

Clair, who retired on December 31, 2018, started receiving benefits of $1,400 a month on January 1, 2019. Her contributions to the qualified pension plan (none of which were deductible) were $74,100.

On September 27, 2019, Alton and Clair received a pro rata 10% stock dividend on 600 shares of stock they owned. They had bought the stock on March 5, 2012, for $20 a share. On December 16, 2019, they sold the 60 dividend shares for $55 a share.

On October 10, 2019, Clair sold the car she had used in commuting to and from work for $17,000. She had paid $31,000 for the car in 2013.

On July 14, 2011, Alton and Clair received a gift of 1,000 shares of stock from their son, Thomas. Thomas's basis in the stock was $35 a share (fair market value at the date of gift was $25). No gift tax was paid on the transfer. Alton and Clair sold the stock on October 8, 2019, for $24 a share.

On May 1, 2019, Clair's mother died, and Clair inherited her personal residence. In February 2019, her mother had paid the property taxes for 2019 of $2,100. The residence had a fair market value of $235,000 and an adjusted basis to the mother of $160,000 on the date of her death. Clair listed the house with a real estate agent, who estimated it was worth $240,000 as of December 31, 2019.

Clair received rent income of $6,000 on a beach house she inherited three years ago from her uncle Charles. She had rented the property for one week during the July 4 weekend and one week during the Thanksgiving holiday. Charles's adjusted basis in the beach house was $150,000, and its fair market value on the date of his death was $240,000. Clair and Alton used the beach house for personal purposes for 56 days during the year. Expenses associated with the house were $3,700 for utilities, maintenance, and repairs; $2,200 for property taxes; and $800 for insurance. There are no mortgages on the property.

Clair and Alton paid estimated Federal income tax of $2,000 and had itemized deductions of $6,800 (excluding any itemized deductions associated with the beach house). They did not engage in any virtual currency transactions during the year.

If they have overpaid their Federal income tax, they want the amount refunded. Both Clair and Alton want $3 to go to the Presidential Election Campaign Fund.

Compute their net tax payable or refund due for 2019, using the appropriate tax rate schedule (not the Tax Tables).

You are required to complete the Qualified Dividends and Capital Gain Tax Worksheet. The form is provided to assist you in computing the tax.

• 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 otherwise instructed.
• It may be necessary to complete the tax schedules before completing Form 1040-SR.
• When computing the tax liability, do not round your immediate calculations. If required round your final answers to the nearest dollar.
• Use the 2019 Tax Rate Schedule provided. Do not use the Tax Tables.

O O Wages, salaries, tips, etc. Attach Form(s) W-2. 1 b Taxable interest .. 2a Tax-exempt interest .. 2a 2b Attach Schedule B Jif required. 3a Qualified dividends ... b Ordinary dividends Taxable amount 3b 4a IRA distributions .... 4a b 4b Taxable amount. 4d 5a 5b O 6 7a c Pensions and annuities 4c Xd 5a Social security benefits Taxable amount 6 Capital gain or loss). Attach Schedule D if required. If not required, check here ... 7a Other income from Schedule 1, line 9... b Add lines 1, 2, 3, 4b, 40, 56, 6, and 7a. This is your total income. 8a Adjustments to income from Schedule 1, line 22.... b Subtract line 8a from line 7b. This is your adjusted gross income Standard Deduction 9 Standard deduction or itemized deductions (from Schedule A). See Standard Deduction Chart below. 10 Qualified business income deduction. Attach Form 8995 or Form 8995-A... 7b XI 8a 8b 9 10 11a 11a Add lines 9 and 10. b Taxable income. Subtract line 11a from line 8b. If zero or less, enter-O- Add the number of boxes checked in the "Age/Blindness" section of Standard Deduction 11b X X X Standard Deduction Chart* IF your filing AND the number of status is... boxes checked is.. IF your filing AND the number of status is... boxes checked is.. 1 1 Single THEN your standard deduction is... 13,850 15,500 25,700 27,000 28,300 THEN your standard deduction is... 20,000 21,650 13,500 14,800 16,100 2 Head of household Married filing separately 2 1 1 Married filing jointly N N or 3 3 V2.cengagenow.com/ilm/takeAssignment/takeAssignmentMain.do?invoker=&take AssignmentSessionLocator=&inprogress=false 2/10 4 10/3/21, 1:17 PM CengageNOWV2 Online teaching and learning resource from Cengage Learning Qualifying 29,600 17,400 widow(er) *Don't use this chart if someone can claim you (or your spouse if filing jointly) as a dependent, your spouse itemizes on a separate return, or you were a dual-status alien. Instead, see instructions. BAA For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. Form 1040-SR (2019) V 12b 13a 13b 15 16 Form 1040-SR (2019) Alton and Clair Newman 111-11-1119 Page 2 12a Tax (see instructions). Check if any from: 10 Form(s) 8814 2 Form 4972 30 12a b Add Schedule 2, line 3, and line 12a and enter the total 13a Child tax credit or credit for other dependents ... b Add Schedule 3, line 7, and line 13a and enter the total 14 Subtract line 13b from line 12b. If zero or less, enter - - 15 Other taxes, including self-employment tax, from Schedule 2, line 10 16 Add lines 14 and 15. This is your total tax .. 17 Federal income tax withheld from Forms W-2 and 1099 If you have a qualifying 18 Other payments and refundable credits: child, attach Sch. EIC. a Earned income credit (EIC)... If you have nontaxable 18b combat pay, see b Additional child tax credit. Attach Schedule 8812 instructions. c American opportunity credit from Form 8863, line 8 18C d Schedule 3, line 14...... e Add lines 18a through 18d. These are your total other payments and refundable credits 19 Add lines 17 and 18e. These are your total payments Refund 20 If line 19 is more than line 16, subtract line 16 from line 19. This is the amount you overpaid 18a 18d 18e XIX 19 20 X 21a 21a Amount of line 20 you want refunded to you. If Form 8888 is attached, check here Direct deposit? Routing number (|||||||| c Type: Checking Savings See instructions. d Account number (IMDATTIMI 22 Amount of line 20 you want applied to your 2020 estimated tax 22 Amount 23 Amount you owe. Subtract line 19 from line 16. For details on how to pay, see instructions. 23 24 You Owe 24 Estimated tax penalty (see instructions) Third Party Do you want to allow another person (other than your paid preparer) to discuss this return Yes. Complete with the IRS? See instructions. Designee below. No Schedule 3 Complete Alton and Clair's Schedule 3 below for 2019. OMB No. 1545- SCHEDULE 3 Additional Credits and Payments 0074 (Form 1040 or 1040-SR) 2019 Department of the Treasury Internal Revenue Attach to Form 1040 or 1040-SR. Attachment Service Go to www.irs.gov/Form1040 for instructions and the latest Sequence No. information. 03 Name(s) shown on Form 1040 or 1040-SR Your social security number Alton and Clair Newman 111-11-1119 Part I Nonrefundable Credits 1 Foreign tax credit. Attach Form 1116 if required. 2 Credit for child and dependent care expenses. Attach Form 2441 3 Education credits from Form 8863, line 19. 4 Retirement savings contributions credit. Attach Form 8880 5 Residential energy credit. Attach Form 5695 .. 6 Other credits from Form: a o 3800 b 8801 co 7 Add lines 1 through 6. Enter here and include on Form 1040 or 1040-SR, line 13 Part II Other Payments and Refundable Credits 8 2019 estimated tax payments and amount applied from 2018 return 9 Net premium tax credit. Attach Form 8962... 10 Amount paid with request for extension to file (see instructions) 11 Excess social security and tier 1 RRTA tax withheld .... 12 Credit for federal tax on fuels. Attach Form 4136. 13 Credits from Form: a 0 2439 b o Reserved co8885 do 14 Add lines 8 through 13. Enter here and on Form 1040 or 1040-SR, line 18d.. BAA For Paperwork Reduction Act Notice, see your tax return instructions. Schedule 3 (Form 1040 or 1040-SR) 2019 JOUWN 6 7 8_91 10 11 12 13 14 Feedback Capital Gains and Losses OMB No. 1545- SCHEDULE D 0074 (Form 1040 or 1040-SR) Attach to Form 1040, 1040-SR, or 1040-NR. 2019 Go to www.irs.gov/Scheduled for instructions and the latest Department of the Treasury Internal Revenue Attachment information. Service (99) Use Form 8949 to list your transactions for lines 1b, 2, 3, 8b, Sequence No. 12 9, and 10. Name(s) shown on return Your social security number Alton and Clair Newman 111-11-1119 Did you dispose of any investment(s) in a qualified opportunity fund during the tax year? Yes No If "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) (h) Gain or loss) See Instructions for how to figure the amounts to enter on the lines below. Adjustments to Subtract column (d) Cost gain or loss from (e) from column Proceeds (or Form(s) 8949, (d) and combine (sales This form may be easier to complete if you round off cents to whole dollars. other Part I, line 2 the result with price) basis) column (9) column (9) la Totals 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.... 1b Totals for all transactions reported on Form(s) 8949 with Box A checked.... 2 Totals for all transactions reported on Form(s) 8949 with Box B checked... Totals for all transactions reported on Form(s) 8949 with Box C checked Short-term gain from Form 6252 and short-term gain or loss) from Forms 4684, 6781, and 8824 4 Net short-term gain or loss) from partnerships, corporations, estates, and trusts from Schedule(s) K-1 6 Short-term capital loss carryover. Enter the amount, if any, from line 8 of your Capital Loss Carryover Worksheet in the instructions. 6 7 Net short-term capital gain or loss). Combine lines la 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.. Part II Long-Term Capital Gains and Losses - Generally Assets Held More Than One Year (see instructions) (9) (h) Gain or (loss) See instructions for how to figure the amounts to enter on the lines below. Adjustments to Subtract column (d) Proceeds! Cost gain or loss from (e) from column (ar Form(s) 8949, (d) and combine This form may be easier to complete if you round off cents to whole dollars. (sales other Part 11, line 2 the result with price) basis) column() column (9) Sa Totals 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 Sb.... Bb Totals for all transactions reported on Form(s) 8949 with Box D checked.... 9 Totals for all transactions reported on Form(s) 8949 with Box E checked.... 10 Totals for all transactions reported on Form(s) 8949 with Box F checked... 11 Gain from Form 4797, Part 1; long-term gain from Forms 2439 and 6252; and long-term gain or (loss) from Forms 4684, 6781, and 8924.. 11 https://v2.cengagenow.com/ilm/lakeAssignmentlake AssignmentMain.do?invoker=&takeAssignmentSessionLocator=&inprogress=false 5/10 10/3/21, 1:17 PM CengageNOWV2 Online teaching and learning resource from Cengage Learning 12 12 Net long-term gain or loss) from partnerships, S corporations, estates, and trusts from Schedule(s) K-1 Capital gain distributions. See the instructions .. 13 14 Long-term capital loss carryover. Enter the amount, if any, from line 13 of your Capital Loss Carryover Worksheet in the instructions.. 14 15 Net long-term capital gain or loss). Combine lines Ba 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 or 1040-SR) 2019 X 16 Schedule D (Form 1040 or 1040-SR) 2019 Alton and Clair Newman 111-11-1119 Page 2 Part III Summary 16 Combine lines 7 and 15 and enter the result If line 16 is a gain, enter the amount from line 16 on Form 1040 or 1040-SR, line 6; or Form 1040-NR, line 14. 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 -- on Form 1040 or 1040-SR, line 6; or Form 1040-NR. line 14. Then go to line 22. 17 Are lines 15 and 16 both gains? Yes. Go to line 18. No. Skip lines 19 through 21, and go to line 22. A 181 18 If you are required to complete the 28% Rate Gain Worksheet (see Instructions), enter the amount, if any, from line 7 of that worksheet 19 If 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 20 Are los 18 and 19 Luthieru I Llankt Yes. Complete the Qualified Dividends and Capital Gain Tax Worksheet in the instructions for Forms 1040 and 1040-SR, line 12a (ar in the instructions for Form 1040-NR, line 42). 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. 21 If line 16 is a loss, enter here and on Form 1040 or 1040-SR, line 6; or Form 1040-NR, line 14, the smaller of: The loss on line 16; or . ($3,000), or if married filing separately. ($1,500) } Note: When figuring which amount is smaller, treat both amounts as positive numbers. 21 33 nynu hau qualified dividende nn Form 1000 oran-SR line : nr Form 1000-NR line 10h2 Yes. Complete the Qualified Dividends and Capital Gain Tax Worksheet in the instructions for Forms 1040 and 1040-SR, line 12a (or in the instructions for Form 1040-NR, line 42). No. Complete the rest of Form 1040, 1040-SR, or 1040-NR. Schedule D (Form 1040 or 1040-SR) 2019 Long-term transactions reported on Form(s) 1099-B showing basis wasn't reported to the IRS (E) Long-term transactions not reported to you on Form 1099-B (F) 1 (a) (b) (c) (d) (e) Adjustment, if any, to (h) Description of property Date acquired Date sold or Proceeds Cost or other gain or loss. If you enter Gain or loss). (Example: 100 shares (Mo., day, yr.) disposed of (sales price) basis. See the an amount in column (g), Subtract column XYZ Co.) (Mo., day, yr.) (see Note below and enter a code in column (f). (e) from column instructions) see Column (e) See the separate (d) and combine in the separate instructions. the result with instructions (f) (9) column (9) Code(s) from Amount of instructions adjustment 03/05/12 09/27/19 60 Shares Stock 0 1000 Shares Stock 07/14/11 10/08/19 0 XI IX XI 2 Totals. Add the amounts in columns (d), (e), (g), and (h) (subtract negative amounts). Enter each total here and include on your Schedule D, line 8b (if Box D above 0 tps://v2.cengagenow.com/ilm/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator=&inprogress=false 7/10 1/3/21, 1:17 PM CengageNOWV2 Online teaching and learning resource from Cengage Learning is checked), line 9 (if Box E above is checked), or line 10 (if Box F above is checked) Note: If you checked Box D above but the basis reported to the IRS was incorrect, enter in column (e) the basis as reported to the IRS, 1040 or 1040-SR, line 6. 1. Enter the amount from Form 1040 or 1040-SR, line 11b. However, if you are filling Form 2555 or 255S-EZ (relating to foreign earned Income), enter the amount from line 3 of the Foreign Earned Income Tax Worksheet .....(Taxable income)... 2. Enter the amount from Form 1040, line 3a 2. ..x 0 3. Are you filing Schedule D? Enter the smaller of line 15 or 16 of Schedule D. If either line 15 or line 16 is blank or a Yes loss, enter -- No Enter the amount from Form 1040 or 1040-SR, line 6. 3 4. 0 4. Add lines 2 and 3. 5. If filing Form 4952 (used to figure investment interest expense deduction), enter any amount from line 4g of that form. Otherwise, enter-O-.. G. Subtract lines from line 4. If zero or leas, enter o 7. Subtract line 6 from line 1. If zero or less, enter-O- 8. Enter: $39,375 if single or married filing separately, $78,750 if married filing jointly or qualifying widow(er). 8. X bo los xxxlxxlx x 9. $52,750 if head of household. 9. Enter the smaller of line 1 or line 8 10. Enter the smaller of line 7 or line 9 11. Subtract line 10 from line 9. This amount is taxed at 0% 12. Enter the smaller of line 1 or line 6 13. Enter the amount from line 11 14. Subtract line 13 from line 12. 10. X 11. 12. 13. 14. 15. Enter: $434,550 if single, $244,425 if married filing separately, 15. https://v2.cengagenow.com/ilmakelssignmentlake AssignmentMain.do?invoker=&takeAssignmentSessionLocator=&inprogress=false 8/10 10/3/21, 1:17 PM CengageNOWv2 Online teaching and learning resource from Cengage Learning $488,850 if married filing jointly or qualifying widower), $461,700 if head of household 16. 16. Enter the smaller of line 1 or line 15 17. Add lines 7 and 11... 18. Subtract line 17 from line 16. If zero or less, enter-O- 17.

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