Question

Complete Form 1040, Schedule 1, Schedule C, Schedule D, Form 8949

Instructions Comprehensive Problem 3-1 Ken (birthdate July 1, 1988) and Amy (birthdate July 4, 1990) Booth have brought you the following information regarding their income, expenses, and withholding for the year. They are unsure which of these items must be used to calculate taxable income. Income: Ken's salary (salesman) $28,500 Amy's wages (part-time nurse) 17,500 Insurance reimbursement for repairs from an auto accident 500 Gift from Uncle George 2,000 Interest income from Lodge State Bank 840 Federal income taxes withheld: From Ken's salary 2,600 From Amy's wages 650 Amy owns and operates a computer bookstore named "The Disk Drive". The store is located at 2000 Broadway Street, Menomonie, WI 54751. During 2019, Amy had the following income and expenses: Sales of books $321,000 Expenses Store rental 16,000 Office expense 6,000 Advertising 11,700 City business license 1,020 Payroll 83,550 Payroll taxes 8,400 Utilities 8,050 Other 3,000 Cost of inventory sold 185,000 Amy treats inventory as non-incidental materials and supplies. This year, Amy loaned a friend $10,000 so that he could make an investment. Instead of making the investment, the friend lost all the money gambling and left for parts unknown. Amy has no hope of ever collecting on this bad debt. Ken, who ordinarily never gambles, won $20,000 at a casino birthday party for one of his friends. The Booths provide the sole support for Ken's parents, Rod (Social Security number 124-80-9050) and Mary (Social Security number 489-37-5576) Booth, who live in their own home. Ken and Amy live at 2345 Wilson Avenue, Menomonie, WI, 54751, and their Social Security numbers are 343- 75-3456 (Ken) and 123-45-7890 (Amy). Ken and Amy can claim a $500 other dependent credit for each parent. Required: Complete the Booth's Form 1040 and the related schedules and forms provided. Assume the taxpayers had full-year health coverage and neither taxpayer wants to contribute to the presidential election campaign. A statement is required to be attached to a return for a nonbusiness bad debt, but this requirement may be ignored for this problem. You may ignore any related self-employment taxes. Assume no 1099-B is filed in association with the bad debt when filling out Form 8949. • You may need to complete the other forms before completing the Form 1040. • If an amount box does not require an entry or the answer is zero, enter "O". • If required, round amounts to the nearest dollar. • Enter all amounts as positive numbers. However, if required, use the minus sign to enter a "loss".

Answer 1

pgnor C Answers Now here we get, particulaos Amount 28500 George are Amy wages 17.500 Interest from 840 Lodge State bank Gross in come 46840 Add adjustable to income: insurance As these are reimbursement receive proceeds from insurance as income if the same amount received as per IRS PUb 17. Gift from unde $ 2000 non taccable as gifts receive non taxable as per IRS. adjust ble to income: Less business loss (1720) Schedule C. Less bad debt (0000) bad debts are dedee Cable) lost all the money gambling Chon busines expense Add Gambling gambling, încome will be treated as other 90000 income ken, income will be treated because income no foom is filled that this income belong, of his forme Schedile I Adjustable Gross income 55120 Less Standard - 24400 Standard deduction is $ 24000 for deduction 2019. Taxable income 30720 Tax liability on 1940 base income Tax liability on excess oves, base 1358.4 @12/ Tax on Taxable 3298.4 income upto 19400 10 % of 19400 -1940 $ 30 720 -19400 = 11320

less other dependent coedit 1000 less federal tax with hold as they have parents who are dependent on them they are allowed other dependent o tax credit as per TC JA rules (2600+650) ols 3250 Refund 951.6 Here, Schedulec particulars Amount 321000 sales Cost of inventory sold Less 185000 less store rental 16000 less office 6000 expense . 11700 10 20 less advertising less: City business license Less pay soll Less Payroll taxes Less Utilities 83550 8400 80 50 Less other 3000 1720 Business Loss schedule 1 gambling income ress bad debts income 20000 10000 10000