2018 Tax Return Problem- Calculate Roberta’s net tax payable or refund due for 2018. Use the appropriate forms and schedules.
Roberta Santos, age 41, is single and lives at 120 Sanborne
Avenue, Springfield, IL 60781. Her Social Security number is
123-45-6780. Roberta has been divorced from her former husband,
Wayne, for three years. She has a son, Jason, who is 17, and a
daughter, June, who is 18. Jason’s Social Security number is
111-11-1112, and June’s is 123-45-6788. Roberta does not want to
contribute $3 to the Presidential Election Campaign Fund.
Roberta, an advertising executive, earned a salary from ABC
Advertising of $80,000 in 2018. Her employer withheld $9,000 in
Federal income tax and $3,100 in state income tax.
Roberta has legal custody of Jason and June. The divorce decree
provides that Roberta is to receive the dependency deductions for
the children. Jason lives with his father during summer vacation.
Wayne indicates that his expenses for Jason are $5,500. Roberta can
document that she spent $6,500 for Jason’s support during 2018. In
prior years, Roberta gave a signed Form 8332 to Wayne regarding
Jason. For 2018, she has decided not to do so. Roberta provides all
of June’s support.
Roberta’s mother died on January 7, 2018. Roberta inherited assets
worth $625,000 from her mother. As the sole beneficiary of her
mother’s life insurance policy, Roberta received insurance proceeds
of $300,000. Her mother’s cost basis for the life insurance policy
was $120,000. Roberta’s favorite aunt gave her $13,000 for her
birthday in October.
On November 8, 2018, Roberta sells for $22,000 Amber stock that she
had purchased for $24,000 from her first cousin, Walt, on December
5, 2012. Walt’s cost basis for the stock was $26,000, and the stock
was worth $23,000 on December 5, 2012. On December 1, 2018, Roberta
sold Falcon stock for $13,500. She had acquired the stock on July
2, 2014, for $8,000.
An examination of Roberta’s records reveals that she received the
following:
• Interest income of $2,500 from First Savings
Bank.
• (She won) Groceries valued at $750 from Kroger
Groceries for being the 100,000th customer.
• Qualified dividend income of $1,800 from Amber.
• Interest income of $3,750 on City of Springfield
school bonds (municipal bonds).
• Alimony of $16,000 from Wayne; divorce finalized in
2015.
• Distribution of $4,800 from ST Partnership. Her
distributive share of the partnership passive taxable income was
$5,300. She had no prior passive activity losses. Assume that the
qualified business income deduction applies and the W–2 wage
limitation does not. (You do not need to put the amount on Sch E
unless you want to; you can just put it on the 1040 in the correct
spot)
From her checkbook records, she determines that she made the
following payments during 2018:
• Charitable contributions of $4,500 to First
Presbyterian Church and $1,500 to the American Red Cross (proper
receipts obtained).
• Paid $5,000 to ECM Hospital for the medical expenses
of a friend from work.
• Mortgage interest on her residence of $7,800 to
Peoples Bank.
• Property taxes of $3,200 on her residence and $1,100
(ad valorem tax -sales tax) on her car. $800 for landscaping
expenses for residence.
• Estimated Federal income taxes of $2,800 and
estimated state income taxes of $1,000 (she paid them for 2018 in
addition to the amount her employer withheld from her
paycheck).
• Medical expenses of $5,000 for her and $800 for
Jason. In December, her medical insurance policy reimbursed $1,500
of the above her medical expenses.
• A $1,000 ticket for parking in a handicapped
space.
• Attorney’s fees of $500 associated with
unsuccessfully contesting the parking ticket.
• Contribution of $250 to the campaign of a candidate
for governor.
Because she did not maintain records of the sales tax she paid, she
calculates the amount from the sales tax table to be $994.
2018 Tax Return Problem- Calculate Roberta’s net tax payable or refund due for 2018. Use the...
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