Question

Sally W. Emanual, a teacher, had the following dividends and interest during the current year: Acorn Corporation bond interest $700 City of Boston interest 1,000 Camp Bank interest 1.250 Jet Corporation dividend (qualified) 1,300 North Mutual fund Capital gain distribution 100 Ordinary dividend (qualified) 150 Non-taxable distribution 200 450 Blue Corporation foreign dividend 250 Additional information pertaining to Sally Emanual includes:

Salary $70,000

Rent income 12,000

Expenses related to rent income 14,000

Pension benefits 7,000

Taxable alimony paid to Sally 4,000

The taxable portion of the pension is $7,000.

Sally actively participates in the rental activity. Other relevant information includes:

Address: 430 Rumsey Place, West Falls, California 92699

Occupation: Credit Manager

Social Security Number: 123-45-6789

Marital Status: Single

Date of divorce: January 10, 2017

Complete Sally’s Schedule 1, Schedule B and complete and compute her taxable income on Form 1040. Assume Schedule E has already been prepared.

Answer 1

:: Solution ::

1. A com crop bond interest $700; - schedule B part I, line 8a of Form 1040
2. City of Boston bonds interest $1000; - schedule B part I, line 8a of Form 1040
3. Camp Bank interest $1250; - schedule B part I, line 8a of Form 1040
4. Jest Crop dividend (qualified) $1300; - schedule B part II, line 9a and 9b of Form 1040
5. North Mutual fund - (Capital gain distribution $100; - line 13 form 1040
6. Ordinary dividend (qualified) $150; - schedule B part II, line 9a and line 9b of Form 1040
7. Non-taxable distribution $200; totalling $450); - do not report
8. B Corporation foreign dividend $250; - schedule B part II, line 9a of Form 1040
9. Additional info Salary of $30,000; - form 1040 line 7
10. Rent income $12,000; Expenses related to rent income $14,000; - schedule E, line 17 form 1040
11. Pension benefits $8000 (the taxable portion of the pension is $7000); - form 1040 line 16a, 16b
12. Alimony paid to Sally $4000 - form 1040 line 11.

Form 1040

1. line 7 - $30,000
2. line 8a - $2,950
3. line 9a - $1700
4. line 9b - $1450
5. line 11 - $4,000
6. line 13 - $100
7. line 16a - $8000
8. line 16b - $7000
9. line 17 - ($2000) - negative

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