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Hello, my name is Shady Slim. I understand you are going to help me figure out my gross income for the year... whatever that means. Its been a busy year and Im a busy man, so let me give you the lowdown on my life and you can do your thing I was unemployed at the beginning of the year and got $2,000 in unemployment compensation. I later got a job as a manager for Roca Cola. I earned $57,500 in base salary this year. My boss gave me a $6,000 Christmas bonus check on December 22. I decided to hold on to that check and not cash it until next year, so I wont have to pay taxes on it this year. Pretty smart, huh? My jobs pretty cool. I get a lot of fringe benefits like a membership to the gym that costs $450 a year and all the Roca Cola I can drink, although I cant really drink a whole lot- figure $40 worth this year. As part of my manager duties, I get to decide on certain things like contracts for the company. My good buddy, Eddie, runs a bottling company. I made sure that he won the bottling contract for Roca Cola for this year (even though his contract wasnt quite the best). Eddie bought me a Corvette this year for being such a good friend. The Corvette cost $60,000 and Im sure he bought it for me out of the goodness of his heart. What a great guy! Heres a bit of good luck for the year. Upon leaving my office one day, I found $8,500 lying in the street! Well, one persons bad luck is my good luck, right? Ilike to gamble a lot.I won a $28,500 poker tournament in Las Vegas this year. I also won about $5,200 over the year playing the guys at our Friday night poker game. Can you believe that I didnt lose anything this year? Speaking of the guys, one of them hit me with his car as we were leaving the game one night. He must have been pretty ticked that he lost! I broke my right leg and my left arm. I sued the guy and got $13,000 for my medical expenses, $3,500 to pay my psychotherapist for the emotional problems I had relating to the injuries ( got really depressed!), and I won $13,000 in punitive damages. Thatll teach him that hes not so tough without his car! Another bit of bad luck. My uncle Monty died this year. I really liked the guy, but the $250,000 inheritance I received from him made me feel a little better about the loss. I did the smart thing with the money and invested it in stocks and bonds and socked a little into my savings account. As a result, I received $650 in dividends from the stock, $250 in interest from the municipal bonds, and $350 in interest from my savings account. My ex-wife, Alice, is still paying me alimony. Shes a lawyer who divorced me in 2015 because I was unethical or something like that. Since she was making so much money and I was unemployed at the time, the judge ruled that she had to pay ME alimony. Isnt that something? She sent me $4,000 in alimony payments this year. She still kind of likes me though. She sent me a check for $550 as a Christmas gift this year. I didnt get her anything, though. So there you go. Thats this year in a nutshell. Can you figure out my gross income and complete page 1 of Form 1040 for me? And since youre a student, this is free, right? Thanks, I owe you one! Let me know if I can get you a six-pack of Roca Cola or somethinga. Calculate the gross income. Inclusions in Gross Income Amount Unemployment compensation Salary Christmas bonus-check Gym membership Corvette Found money Gambling winnings Punitive damages from lawsuit Dividends Savings account interest Alimony Total gross income0 U.S. Individual Income Tax Return para OMB No. 1 545-0074 | IRS Uso Orty-Do not wrte or stapin this spaca. For the year Jan. 1-Dec. 31, 2017, or other tax year begihning fa joint retun, spouses first Home address(number Cihy, town or post ofilce, state, and 21P code. Ifyou have a foreign address, also complete spaces below (see Instructions) Foreign county name name and Inital Spouses social securty number and street, if you have a P.O. Dox, see Instructions Make sure the SSNIS) above and on llne ec are correct Preskdentlal Election Campaign Check here T you, or your spouse ring Foreign postal code ointy, want s3 to go to tnis tund. Checking a box below wl not change your taxor 4 Џ Head of household (with quaryng person. (See instructions) Married filing jointly (even if only one had income) 3 t the qualitying person is a child but not your dapendent, enter this childs name here. Check only one Married filing separately. Enter spouses SSN above and full name here. 5 Qualifying widowler) (see instructions) Exemptions b-l spouse 6a Yourself. If someone can claim you as a dependent, do not check box 6a on 6a and 6b No. of children on 6c who: (4) I chlld under age 17 for child tax credt lved with you_ soclal securty numberrelatlonship to you did not live with you due to divorce If more than four check here Add numbers on d Total number of exemptions claimed 7 Wages, salaries, tips, etc. Attach Fonm/s) W-2 8a Taxable interest. Attach Schedule B if required b Tax-exempt interest. Do not include on line 8a Income Ba Attach Forms) W-2 here. Also attach Forms W-2G and 1099-R if tax W-2here. Ale9a Ordinary dividends. Attach Schedule B if required 9b 10 Taxable refunds, credits, or offsets of state and local income taxes Alimony received 12 Business income or (loss). Attach Schedule C or C-EZ 13 Capital gain or (loss). Attach Schedule D if required. If not required, check here13 14 Other gains or (losses). Attach Fom 4797 If you did not 15a b Taxable amount instructions. 15a IRA distributions 16a Pensions and annuities 16a 17 Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E 17 18 Farm income or (loss). Attach Schedule F 19 b Taxable amount 20a 21 22 Social security benefits 20a Other income. List type and amount Combine the amounts in the far nht colum for ines 7 through 21. This s your total income b Taxable amount 20b 22 23 Educator expenses 24 Certain business expenses of reservists, performing artists, and Gross Income fee-basis govemment officials. Attach Form 2108 or 2106-EZ 24 25 26 25 Health savings account deduction. Attach Form 8889 27 Deductible part of self-employment tax. Attach Schedula SE 28 Self-employed SEP, SIMPLE, and qualified plans 29 Self-employed health insurance deduction 31a Alimony paid b Recipients SSN 32 33 34 35 36 37 Student loan interest deduction Tuition and fees. Attach Form 8917 Domestic production activities deduction. Attach Form 8903 35 Add lines 23 through 35 Subtract line 36 from line 22. This is your adjusted gross income 34 For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. Cat No. 113208 Form 1040 (2017Page 2 38 Amount from line 37 (adjusted gross income) 39a CheckYou were bom before January 2, 1953,Blind. Total boxes Tax and Spouse was bom before January 2, 1953, Blind. checked39a b If your spouse itemizes on a separate retum or you were a dual-status alien, check hee39b Standard 40 temized deductions (from Schedule A) or your standard deduction (see left margin) on41 Subtract line 40 from line 38 People who 42 Exemptions. If ine 38 is $158,900 or less, multiply $4,050 by the number on line &d. Otherwise, see instructions 42 box on line43 Taxable income. Subtract line 42 from line 41. If line 42 is more than line 41, enter -0- 39oor nber! 44 Tax(see nstructinsl heck if any form: a -Forms) 8814 b0Fom 4972 с[ -H| claimed as a 45 Altemative minimum tax (see instructions). Attach Form 6251 nstructions. 47 Add lines 44, 45, and 46 Married filing 49 Credit for child and dependent care expenses. Attach Form 2441 49 Married filing 51 Retirement savings contributions credit. Attach Form 888051 Head of54 Other credits from Form: a 3800 b8801 c 48 Foreign tax credit. Attach Form 1116 if required 50 Education credits from Form 8863, line 19 52 Child tax credit. Attach Schedule 8812, if required 53 Residential energy credits. Attach Form 5695 55 56 Add lines 48 through 54. These are your total credits Subtract line 55 from line 47. If line 55 is more than line 47, enter -0- 58 Unreported social security and Medicare tax from Form: 4197 b 8919 other Taxes a 60a Household employment taxes from Schedule H b First-time homebuyer credit repayment. Attach Form 5405 if required 61 Health care: individual responsibility (see instructions) Full-year coverage 62 Taxes from: a Form 8959 bForm 8960Instructions; enter codels) 63 Add lines 56 through 62. This is your total tax 64 Payments Federal income tax withheld from Forms W-2 and 1099 65 2017 estimated tax payments and amount applied from 2016 return65 f you have a6a Eamed income credit (EIC) qualifying b Nontaxable combat pay election 66b Schedule EIC 67 Additional child tax credit. Attach Schedule 8812 68 69 70 71 72 American opportunity credit from Form 8863, line 8 Net premium tax credit. Attach Form 8962 Amount paid with request for extension to file Excess social security and tier 1 RRTA tax withheld Credit for federal tax on fuels. Attach Form 4136 74 Add lines 64, 65, 66a, and 67 through 73. These are your total payments Refund75 If line 74 is more than line 63, subtract line 63 from line 74. This is the amount you overpaid 75 76a Amount of line 75 you want refunded to you. If Form 8888 is attached, check here76a Direct deposit?b Routing number cType:Checking Savings 77 Amount of line 75 you want applied to your 2018 estimated tax77 Amount 78 Amount you owe. Subtract line 74 from line 63. For details on how to pay, see instructions78 You Owe79 Estimated tax penalty (see instructions) Third Par y Do you want to allow another person to discuss this return with the I see instructions ? П Yes. Complete below. No Uhder penalties of perjury, I declare that I have examined this retum and accompanying schedules and statements, and to the best af my knowledge and belief, they are true, comect, and ocurately ist all amounts and souces af income l eceived during the tax yar. Declaration of preparer jother than taxpayer) is based o al infomation of which preparer has any knowledge. Date number Keep a copy forSpouses signature. If a joint returm, both must sign Date the IAS sent you an Identity Protection Date Go to www.irs.gowiFom1040 for Instructions and the latest Information. Form 1040 2017)

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Answer #1

Ans: Shady Slim

a) Computation of Gross Income

Gross Income Amount ($)
Unemployment Compensation 2000
Salary 57500
Christmas Bonus -Check 6000
Gym Membership 450
Corvette 60000
Found Money 8500
Gambling Winning 33700
Punitive damages from the Law suit 13000
Dividend 600
Saving A/c Interest 350
Alimony 4000
Christmas gift from ex-wife 550
Gross total Income 186650

b) Page 1 of Form 1040

line no. Particular Amount ($)
1 Single
7 Wages, salry , tips etc. (57500+6000+450) 63950
8a Taxable Interest 350
8b Non taxable Interest ( Interest on Municipal bonds)
9a Ordinary Dividend 600
9b Qualified dividend
11 Alimony received 4000
19 Unemployment Compensation 2000
21 Other income List
Found Money 8500
Corvette 60000
Gambling Winning 33700
Punitive damages from the Law suit 13000
Christmas gift from ex-wife 550
115750
22 Total Income 186650
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