Tax Return
Andi Fauci, 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
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
SALE OF RENTAL RESIDENCE See Daily 9, Problem D
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 See Daily 9, Problem D
Sales price $ 5,500
Cost (October 18, 2014) 9,000
Depreciation allowed 6,880
Complete a Form 1040 with the appropriate Schedules and Forms for 2019 for Andi Fauci.
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.
The sale of the land goes in Part I of Form 4797; and the sale of the building and appliances, Part III.
Scan your return and post it to Turnitin by April 25. If you do not have a scanner, please take a picture of the following: front of form 1040, front of Schedule E, front of Schedule D and front of Form 4797 (all in one picture) and post it to Turnitin.
Daily 9 Problem D
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
