Question

Note: This problem is for the 2018 tax year. Logan B. Taylor is a widower whose wife, Sara, died on June 6, 2016. He lives at 4680 Dogwood Lane, Springfield, MO 65801. He is employed as a paralegal by a local law firm. During 2018, 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 2017 tax overpayment) 700 Logan inherited securities worth $60,000 from his uncle, Daniel, who died in 2018. 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, 2013, for $85,000 and held as an investment. As the neighborhood has deteriorated, Logan decided to cut his losses and sold the lot on January 5, 2018, 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 2018 include the following: Medical expenses (including $10,500 for dental) $11,500 Taxes— State of Missouri income tax (includes withholdings during 2018) $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 2018 and 2019) 4,800 Logan and his dependents are covered by his employer's health insurance policy for all of 2018. However, 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, 2018, upon the advice of his pastor, he prepaid his pledge for 2019. Logan's household, all of whom he supports, includes the following: Social Security Number Birth Date Logan Taylor (age 48) 123-45-6787 08/30/1970 Helen Taylor (age 70) 123-45-6780 01/13/1948 Asher Taylor (age 23) 123-45-6783 07/18/1995 Mia Taylor (age 22) 123-45-6784 02/16/1996 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 Logan's wages. Required: Determine the Federal income tax for 2018 for Logan by providing the following information that be reported on Form 1040, Schedule A Schedule D, and Form 8849. Complete the tax advice letter. Make realistic assumptions about any missing data. 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. Enter all amounts as positive numbers. If an amount box does not require an entry or the answer is zero, enter "0". When computing the tax liability, do not round your immediate calculations. If required round your final answers to the nearest dollar.

Provide the following that would be reported on Logan's Schedule D and Form 8949.

1. Calculate the the total sales price of the transaction(s) reported.
$

2. Calculate the total cost basis/purchase price of transaction(s) reported.
$

3. Calculate the amount and character of the net gain or loss.
There is a $   capital  .

Answer 1

INCOME HEAD	AMOUNT	TYPE
Salary	$80,000	TAXABLE
Interest Income— Money Market Account At Omni Bank	$300	TAXABLE
Interest Income— Savings Account At Boone State Bank	$1,100	TAXABLE
City Of Springfield General Purpose Bonds	$3,000	EXEMPT
City Of Springfield General Purpose Bonds	$4,400	EXEMPT
Inheritance From Daniel	$60,000	EXEMPT
Life Insurance Proceeds	$200,000	EXEMPT
Sale Of St. Louis Lot	$80,000	TAXABLE
Proceeds From Estate Sale	$9,000	TAXABLE
Federal Income Tax Refund (For 2017 Tax Overpayment)	$700	EXEMPT
Logan Inherited Securities Worth	$60,000	from his uncle, Daniel, who died in 2018 - EXEMPT
Logan Also Was The Designated Beneficiary Of An Insurance Policy On Daniel'S Life With A Maturity Value Of	$200,000	EXEMPT
Gross Income-Taxable	$170,400
Contribution To Church (Paid Pledges For 2018)	$2,400
Total Adjusted Income	$168,000
Medical Expenses (Including $10,500 For Dental)	$11,500
Net Income	$156,500

Rate	Individuals	INCOME TAX
10%	Up to $9,525	$953
12%	$9,526 to $38,700	$3,500.88
22%	38,701 to $82,500	$9,635.78
24%	$82,501 to $157,500	$17,759.76
32%	$157,501 to $200,000
35%	$200,001 to $500,000
37%	over $500,000
	Total Tax Amt:-	$31,848.92

The lot in St. Louis was purchased on May 2, 2013, for and held as an investment	$85,000
As the neighborhood has deteriorated, Logan decided to cut his losses and sold the lot on January 5, 2018, for	$80,000
Purchase 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	$18,000
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	$9,000
net loss from sale of investment	$14,000

Rate	Individuals By deducting withheld	INCOME TAX
10%	Up to $9,525	$953
12%	$9,526 to $38,700	$3,500.88
22%	38,701 to $82,500	$9,635.78
24%	$82,501 to $157,500	$9,059.76
32%	$157,501 to $200,000
35%	$200,001 to $500,000
37%	over $500,000
	Total Tax Amt:-	$23,148.92