Question

and Brandon Arnold are married and file a joint return. Their Social Security num bers are 000-00-1111 and 000-00-2222, respectively. Kara and Brandon have one son, Henry, age 3. His Social Security number is 000-00-3333. They live at 356 Welcome Lane, Woodbury, WA 84653. They report their income on the cash method. During 201 they report the following items Salar Interest income from money market accounts Dividend income from Davis Corp. stock Cash contributions to church Rental of a condominium in Lutsen: $103,000 600 700 6,000 Rental income (30 days) Interest expense Property taxes Maintenance Depreciation (entire year) Insurance Days of personal us 12,000 7,000 3,200 1,700 7,500 2,000 16 The address of the Condo is 1127 Skyline Drive, Lursen, WA 84666. During the year the a. In 2015, Brandon had loaned a friend $3,000 to help pay medical bills. During 2017, b. On June 20, 2017, Brandon sells Kim Corporation stock for $16,000. He purchased following events also occur: he discovers that his "friend" has skipped town the stock on December 12, 2011 for $22,000 c. On Septembęr 19, 2017, Kara discovers that the penny stock of Roberts, Inc. she purchased on January 2 of the prior year is completely worthless. She paid $5,000 for the stock. d. Instead of accepting $60 the utility store offers for their old dishwasher, they donate it to Goodwill on November 21, 2017. They purchased the dishwasher for $750 on March 30, 2007. The new dishwasher cost $900 e. Kara and Brandon purchased a new residence for $250,000. As part of the closing costs they pay two points, or $3,800, on the mortgage, which is interest rather than loan process- ing fees. This payment enables them to obtain a more favorable interest rate for the term of the loan. They also paid $8,400 in interest on their mortgage on their personal residence. f. They pay $4,100 in property taxes on their residence and $7,500 in state income taxes g. On July 20, 2017, Kara and Brandon donate 1,000 shares of Anton, Inc. stock to the local community college. The value of the stock on that date is $10,200. Anton, Inc a listed stock. They had purchased the stock on November 10, 2010 for $1,000 h. $7,000 in federal income tax was withheld during the year Complete Kara and Brandon's Form 1040, Schedules A, B, D, and E, Form 8283 and Form 8949. For purposes of this problem, disregard the alternative minimum tax and any credits.

Answer 1

U.S. Individual Income Tax Return OMB No. 1545-0074 IRS Use Only- Do not wite or staple in this space. Forthe yaar Jan 1-Dec. 31, 2014, or ather tax year beginning Your first name and initial Brandon If a joint retum, spouse's first name and initial See separate instructions. Your social security number Last name 000-00-2222 Spouse's social security number 000-00-1111 Last name Home address (number and street). If you have a PO. box, see instructions 356 WelcomeLane City, town or post office, state, and ZIP code. you have a foreign address, also complete spaces below (see instructions). Woodbur Foreign country name Make sure the SSN(s) above and on line 6c are correct Presidential Election Campaign WA 84653 Check here if you, or your spouse if filing jointly, want 53 to go to this fund. Checking Foreign postal code boxbelow will not charge your tax o Filing Status 2IX 3Married filing separately. Enter spouse's SSN above Marnied filing jointy (even if cnly one had income) 4 □ Head of household (with qualifying person) (See instructions) tf he qualifying person is a child but not your dependent, enter this box ck only ne and full name here 5 Qualifying widow(er) with dependent child Yourself- if someone can claim you as a dependent. do not check box 6a . . . . . . .. Boxes checked on 6a and 6b Exemptions c Dependents 4) Xif chid No. of children under age on 6c who social security numberrelatonship to you qualifying for lived with you 1 child tax ret did not live with 1) Firsname Henry Arnold It more than our 00-00-3333Son you due to divorce see instructions and check here De not entered abov Add numbers on lines above d Total number of ons cla Income 7 Wages, salaries, tips, etc. Attach Form(s) W-2 103,000 8a Taxable interest. Attach Schedule B if required b Tax-exempt interest. Do not include on line 8a 8b Attach Form(s) W-2 here. Also attach Forms W-2G and 1099-R if tax was withheld. 9a Ordinary dividends. Attach Schedule B if required, . 700 b Quaified dividends 10 Taxable refunds, credits, or offsets of state and local income taxes 11 Alimonyr 12 Business income or (loss). Attach Schedule C or C-EZ 13 9b .. . If you did not Capital gain ar (loss). Attach Schedule D if required. If not required, check here. 13 see instructions. 14 Other gains or (losses). Attach Form 4797. . . 15a IRA distibutions 16a Pensions and annuities 16a 17 Rental real estate, royalties, partnerships, S corporatins, trusts, etc Attach Schedule E 18 Farm income or (loss). Attach Schedule F. . b T axable amount 15b 20a Social security benefits 21 Other income. List type and amount 22 Combine the amounts in the far right column for lines 7 through 21. This is your total income22 23 Educalor expenses. 24 Certain business expenses of rescrvists, performing artists, and 20a b Taxable amount . 101,300 23 Adjusted Gross Income fee-besis government officials. Altach Form 2106 ar 2106-EZ.24 25 Health savings account doduction. Attach Form 8889. .. . 26 Moving expenses Altech Fom 3903 27 Deductible part of solf employment tax Attach Schodule SE. . 27 28 Self-employed SEP, SIMPLE, and qualified plans 29 Solf employed health insurance deduction . ...29 30 Penalty on early withdrawal of savings . 31a Alimony paid b Recipients SSN 32 IRA deduction 33 Student loan interest deduction _... . 26 3 Domestic production activties deduction. Attach Form 8903.. 35 0 101,300 Form 1040 (2014) s income or Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. UYA

000-00-2222 Page 2 5 Form 1040 (2014) Brandon and Kara Arnold 1 0 if Spouse was bom before January 2, 190,Blind. J checked 39 If your spouse itemizes on a separate return or you were a dual-status alien, check here b 39bD :Peope who42 Exemptions. Ifline 38 is $152,525 or less, mutiply 3950 by the number on line 6d. Ctherwise, see instructions, 42 box on line 43 Taxable income. Subtract line 42 from line 41. If line 42 is more than line 41, enter -0 wtho can be 44(see instructions). Check if any from aFom(s) 8814 bFom 4972 c 45 Alternative minimum tax (see instructions). Attach Form 6251 1 Med fing 48 Foreign tax credit. Attach Form 1116 if required 51 Retirement savings contributions credit. Attach Fom 8880 52 Child tax aedt. Attach Schedule 8812, if required 56 Subtract line 55 from ine 47. If line 55 is more than line 47, enter -0 5 5 59 Additional tax an IRAs, other queliied retirement plans, elc. Attach Form 5329 if required. b First-time homabuyer credi repayent Attach Form 5M05 if requred 61 Health care: individual responsibility (see instructions) Full-year coverageX. .. 62 Taxes from a Form 8959 b□ Farm 8960 constructor sert테 code(s) 63 Add lines 56 through 62. This is your total tax 1 0 0 65 2014 cstimated tax payments and amount appliod from 2013 retum65 Schedule EIC67 Additional child tax credit Attach Schedule 8812 68 American opportunity credit from Form 8863, ine 8 72 Credit for federal tax on fuels. Attach Form 4136 73 Credits from Form a2439bReservad Reservedd 1 3 3 Refund75 If line 74 is more than line 63, subtract line 63 from line 74. This is the amount you overpaid 6 77 Amount of line 75 you want applied to your 2015 estimated tax77 You Owe 79 Estimated tax penalty (see instructions) Third Party Do you want to allow another person to discuss this retum with the IRS (see instructions)Yes. Colete below they are true, co and camplete. Declaration of preparer other than taxpayer) ishased on all information of which preparer has

MB No 1545-0074 SCHEDULE A (Form 1040) Department of the Treasury ltemized Deductions 2014 Information about Schedule A and its separate instructions is at www.irs.gov/schedulea. Attach to Form 1040 Sequence No. r rtemal Revenue Service Name(s) shown on Form 1040 Your social security number 00-00-2222 Brandon and Kara Arnold Medical Dental Caution. Do not include expenses reimbursed or pad by others 1 Medical and dental expenses (see instructions) 2 Enter amount from Form 1040, ine 382 3 Multiply ine 2 by 10% (.10). But if cither you or your spouse was Expenses borm belore January 2, 1950, multiply line 2 by 7.5% (075) instead. 3 4 Subtract line 3 from line 1. If line 3 is more than ine 1, enter-0 0 5 Stale and local (check only one box) Taxes You Paid 7,500 Income taxes, or General sales taxes b 5,213 6 Real ostate taxcs (soc instructions) - ..- - 7 Personal property taxes 8 Other taxos. List type and amount 12,713 9 10 11 Add lincs 5 Home mortgage interest สd points reported to you on Form 1098 Home mortgage interest not reported to you on Form 1098. If paid to the person from whom you bought the home, see instructions and show that person's name, identifying no., and address 10 10,835 Interest You Paid Your mortgage deduction may 12 Points not reportad to you on Form 1098 See instruct ons for special rules 3,800 be limited (see13 Mortgage insurance premiums Cs instructions) (see instructions) 14 Investment interest. Attach Form 4952 if required. (See instructions.)14 15 dd lines 10 through 14 14,635 16 Gifts by cash or check If you made any gift of $250 or 17 Other than by cash ar check If any gift of $250 or more, 18 Carryover from prior year Gifts to Charity more, see instructions. . . -. . 6,000 If you made a gift and got a benefit for it see instructions. see instructions. You must attach Form 8283 if over $500 10,260 19 Add lines 16thr 16,260 Casualty and Theft Losses 20 Casualty ar theft lass(es) Attach Form 4684 (See instructions) 0 21 Unreimbursed employee expenses -job trave, union dues, job education, etc. Attach Form 2106 or 2106-EZ if required. Job Expenses and Certain Miscellaneous Deductions (See instructions) Tax preparation fees type and aount 22 23 Other expenses -investment, safe deposit box, etc. List 24Add lines 21 through 23 25 Entor amount from Form 1040, ine 38 25 26 Multiply ine 25 by 2%(02) 27 Subtract linc 26 from ine 24. If line 26 is more than line 24, enter-0 28 Other from list in instructions. List typeand amount 26 27 0 Other Miscellaneous Deductions Total Itemized Deductions Ordinary loss 3,000 0 29 s Form 1040, line 38, over $152,525? X No. Your deduction is not limited. Add the amounts in the far right column 43,608 for lines 4 through 28. Also, enter this amount on Form 1040, line 40. Yes. Your deduction may be limited. See the Itemized Deductions Worksheet in the instructions to figure the amount to enter 30 If you doct to itemize deductions oven though they are loss than your standard deduction, LUYA

OMB No. 1545-0074 SCHEDULE D Capital Gains and Losses (Form 1040) Attach to Form 1040 or Form 1040NR Information about Schedule D and its separate instructions is at www.irs.gov/scheduled. Use Fom 8949 to list your transactions for lines 1b, 2, 3, 8b, 9, and 10. Dopartment of the Treasury Attachment uence No Intemal Revenue Service Names) shown on return Brandon and Kara Arnold Your social security number 000-00-2222 Part Short-Term Capital Gains and Losses - Assets Held One Year or Les See instructions for how to figure the amounts to enter on the lines below (h) Gain or (loss) Subtract column (e) gain or loss fromfrom column (d) and Adjustments to Proceeds Cost This form may be easier to complete if you round off(sales price) cents to whole dollars (or other bais) Form(s) 8949, Part,bine the result with line 2, column (g) column (9) Totals for all short-term transactions reported on Form 1099-B for which basis was reported to the IRS and for which you have no adjustments (see instructions). However, if you choose to report all these transactions on Form 8949, leave this line blank and go to line 1b Totals for all transactions reported on Form(s) 8949 with Box A checked Totals for all transactions reported on Form(s) 8949 with Box B checked Totals for all transactions reported on Form(s) 8949 with Box C checked 1a 1b 2 3 3,000 3,000 4 Short-term gain from Form 6252 and short-term gain or (loss) from Forms 4684, 6781, and 88244 5 Net short-term gain or (loss) from partnerships, S corporations, estates, and trusts from 6 Short-term capital loss carryover. Enter the amount, if any, from line 8 of your Capital Loss Carryover Worksheet in the instructions. . . 7 Net short-term capital gain or (loss). Combine lines 1a through 6 in column (h). If you have any long-term capital gains or losses, go to Part I below. Otherwise, go to Part III on page 2 Part II Long-Term Capital Gains and Losses - Assets Held More Than One Year See instructions for how to figure the amounts to 7 3,000 Adjustments to gain or loss from (h) Gain or (loss) Subtract column (e) from column (d) and enter on the lines below Proceeds Cost This form may be easier to complete if you round off(sales price) or other basis) Form(s) 8949, Part ,combine the result with cents to whole dollars line 2, column (g) column (g) 8a Totals for all long-term transactions reported on Form 1099-B for which basis was reported to the IRS and for which you have no adjustments (see instructions). However, if you choose to report all these transactions on Form 8949, leave this line blank and go to line 8b Totals for all transactions reported on Form(s) 8949 with Box D checked 16,000 27,000 11.000 8b 9 Totals for all transactions reported on Form(s) 10 Totals for all transactions reported on Form(s) 11 Gain from Form 4797, Part ; long-term gain from Forms 2439 and 6252; and long-term gain or 12 Net long-term gain or (loss) from partnerships, S corporations, estates, and trusts from 8949 with Box E checked 16.000 22.000 -6,000 8949 with Box F checked 5.000 -5,000 (loss) from Forms 4684, 6781, and 8824 13 Capital gain distributions. See the instructions. 13 14 Long-term capital loss carryover. Enter the amount, if any, from line 13 of your Capital Loss 15 Net long-term capital gain or (loss Combine lines 8a through 14 in column (h). Then go to For Paperwork Reduction Act Notice, see your tax returmjnstryctions» 02:04: 45PM Part III -22,000 Schedule D (Form 1040) 2014 UYA

Schedule D (Form 1040) 2014 Brandon and Kara Arnold 000-00-2222 Page 2 Part III Summary 16 Combine lines 7 and 15 and enter the result..............................-6 -25,000 * If line 16 is a gain, enter the amount from line 16 on Form 1040, line 13, or Form 1040NR, line 14. Then go to line 17 below If line 16 is a loss, skip lines 17 through 20 below. Then go to line 21. Also be sure to complete line 22 * If line 16 is zero, skip lines 17 through 21 below and enter -0- on Form 1040, line 13, or Form 1040NR, line 14. Then go to line 22. 17 Are lines 15 and 16 both gains? Yes. Go to line 18 No. Skip lines 18 through 21, and go to line 22. 18 Enter the amount, if any, from line 7 of the 28% Rate Gain Worksheet in the instructions 18 0 . 19 Enter the amount, if any, from line 18 of the Unrecaptured Section 1250 Gain Worksheet ..19 0 20 Are lines 18 and 19 both zero or blank? Yes. Complete the Qualified Dividends and Capital Gain Tax Worksheet in the instructions for Form 1040, line 44 (or in the instructions for Form 1040NR, line 42). Do notcomplete ines 21 and 22 below No. Complete the Schedule D Tax Worksheet in the instructions. Do not complete lines 21 and 22 below 21 If line 16 is a loss, enter here and on Form 1040, line 13, or Form 1040NR, line 14, the smaller of The loss on line 16 or 3,000.) ($3,000), or if married filing separately, ($1,500) Note. When figuring which amount is smaller, treat both amounts as positive numbers Do you have qualified dividends on Form 1040, line 9b, or Form 1040NR, line 10b? X Yes. Complete the Qualified Dividends and Capital Gain Tax Worksheet in the instructions 22 for Form 1040, e 44 (or in the instructions for Form 1040NR, line 42). No. Complete the rest of Form 1040 or Form 1040NR. UYA Schedule D (Fom 1040) 2014 https://www.coursehero.com file/25111791 Brandon-and-Kara-Amold-2014-Tax-Returnpds 04/09/2017 02:04:45 PM

Supplemental Income and Loss (From rental real estate, royalties, partnerships, S corporations, estates, trusts, REMICs, etc.) Attach to Form 1040, 1040NR, or Form 1041 Information about Schedule E and its separate instructions is at www.irs.gov/schedulcc. Brandon and Kara Arnold 0 1a Physical address of each A1127 Skyline Dr Lutsen, WA 84666 1 2 1 Single Family Residence 3 Vacation/Short-Term Rental 5 Land 2 Multi-Family Residence 4 Commercial 6 2 2 12 Mortgage interest paid to banks, etc. (see instructions) 18 Depreciation expense or depletion 0 20 Total expenses. Add lines 5 through 19 5 2 21 Subtract line 20 from line 3 (rents) andlor 4 (royalties). If result 22 Deductible rental real estate loss after limitation, if any 23a Total of all amounts reported on line 3 for all rental properties is a (loss), see inst. to find out if you must file Form 6198. . c Total of all amounts reported on line 12 for all properties e Total of all amounts reported on line 20 for all properties 24 Income. Add positive amounts shown on line 21. Do not include any losses 2 9 2 5 5 line 17, or Form 1040NR, line 18. Otherwise, include this amount in the total on line 41 on https://www.coursehero.com file/25111791 Brandon-and-Kara-Amold-2014-Tax-Returnpds 04/09/2017 02:04:45 PM

Fom 8283 Noncash Charitable Contributions OMB No. 1545-0908 (Rev. December 2014) Attach to your tax return if you claimed a total deduction of over $600 for all contributed property Department of the Treasury Information about Form 8283 and its separate instructions is at www.irs.govform8283Sequence No 155 Internal Reveue Service Name(s) shown on your income tax return Brandon and Kara Arnold Note. Figure the amount of your contribution deduction before completing this form. See your tax returm instructions Section A. Donated Property of $5,000 or Less and Publicly Traded Securities List in this section only items Identifying number 00-00-2222 or groups of similar items) for which you claimed a deduction of $5,000 or less. Also list publicly traded securities even if the deduction is more than $5,000 (see instructions Part I Information on Donated Property If you need more space, attach a statement (c) Descripion of donaled property (a) Name and address of the donee organization (b) If donated property is a vehicle (see instructions) number (unless Form 1098-Cis attached). (For à vehicle, cnter the yr, mak, model, and mileage. For securities, enter the company name and the number of shares check the box Also r the vehicle identification oodwill WA 98001 ishwasher (2003 ocal Community Colleg WA 98001 ton Inc stock Note. If the amount you claimed as a deduction for an item is $500 or less, you do not have to complete columns (e), (f), and (d) Date of the (e) Date acquired(f) How acquired(g) Donor's cost h) Fair market value bydonor (mo.. yr ) (i) Method used to determine the fair market value by donor rchased rchase or adjusted basis 750 1,000 (see instructions) 60.0ffer 10,200.Quote Part II Partial Interests and Restricted Use Property - Complete lines 2a through 2e if you gave less than an entire interest in a property listed in Part I. Complete lines 3a through 3c if conditions were placed on a contribution listed in Part l; also attach the required statement (see instructions 2a Enter the letter from Part that identifies the property for which you gave less than an entire interest If Part II applies to more than one property, attach a separate statement b Total amount claimed as a deduction for the property listed in Part 1) For this tax year (2) For any prior tax years C Name and address of each organization to which any such contribution was made in a prior year (complete only if different from the donee organization above): Name of charitable organization (donee) Address (number, street, and room or sute no.) City or town, state, and ZIP code d For tangible property, enter the place where the property is located or kept> e Name of any person, other than the donee organization, having actual possession of the property 3a Yes No Is there a restriction, either temporary or permanent, on the donee's right to use or dispose of the donated property? Did you give to anyone (other than the donee organization or another organization participating with the donee organization in cooperative fundraising) the right to the income from the donated property or to the possession of the property, including the right to vote donated securities, to acquire the property by purchase or otherwise, or to designate the person having such income, possession, or right to acquire? Is there a restriction limiting the donated b c for a particular use? Form 8283 (Rev 12-2014) For Paperwork Reduction Act Notice, see separate instructions. UYA https://www.coursehero.com file/25111791 Brandon-and-Kara-Amold-2014-Tax-Returnpds 04/09/2017 02:04:45 PM

I Form 8283 (Rev. 12-2014) Name(s) shown on your income taxreturn Brandon and Kara Arnold Section B. Donated Property Over $5,000 (Except Publicly Traded Securities)- Complele this section for one item (or one group of Identifying number 00-00-2222 similar items) for which you claimed a deduction of more than $5,000 per item or group (except contributions of publicly traded securities reported in Section A). Provide a separale form for each property donated unless it is part of a group of similar items. An appraisal is generally required for property listed in Section B. See instructions. Information on Donated Pro Part l 4 Check the box that describes the type of property donated To be completed by the taxpayer and/or appraiser aArt (contribution of $20,000 or more Art (contribution of less than $20,000lectibles Other b□ Qualified Conservation Contribution e□ h □ Intellectual Property Other Real Estate Secunties cEquipment Vehides Art indludes paintings, sculptures, watercolors, prints, drawings, ceramics, antiques, decorative arts, texbles, carpets, silver, rare manuscripts, histoncal memorabilia, and other simiar objects. Collectibles include coins, stamps, books, gems, jewelry, sports memorabilia, dolls, etc,but not art as defined above Note. In ccrtain casos iod isa of the See instructions must attach a (a) Description of donated property (if you need more space, attach a separate statement (c) Appraised fair market value (b)lIttangble property was conated give a bnet summary ot he owerall physical condnon of the property at the time of the gii See instructions (d) Date acquirede)How acquired by donor (mo., yr.) (f) Donors cost or adjusted basis g) For bargain sales, enter amount received by donor (h) Amount claimed as a (i) Date of contribution Part II Taxpayer (Donor) Statement - List each item included in Part I above that the appraisal identifies as having a value of $500 or less. See instructions l declare that the folowing itemis) induded in Part l above has to the best of my ㎞owledge and belief an appraised value of not more than S500 (per item) Enter identifying letter from Part I and descnbe the specific item. See instructions. Signature of tapayor (donor) Part III Date Declaration of raiser declare thatI am not the donor, the donee, a party to the transaction in which the donor acquired the property, employed by, or related to any of the foregoing persons, or married to any person who is related to any of the foregoing persons. And, if regularly used by the donor, donee, or party to the transaction, I performed the majority of my appraisals during my tax year for other persons Also, Ideclare that I perfom appraisals on a regular basis; and that because of my qualfications as described in the appraisal, I am qualified to make appraisals of the type of property being valued. Icertify that the appraisal fees were not based on a percenlage of the appraised property value. Furthermore, I understand that a false or fraudulent overstaternent of the property value as described in the qualified appraisal or this Form 8283 may subject me to the penality under section 6701(a) (aiding and abetting the understatement of tax liability). In addition,Iunderstand that I may be subject to a penalty under section 6695A if I know, or reasonably shoid know that my appraisal is to be used in connection with a return or claim for retund and a substantial or gross valuation misstaterment results from my appraisal. Iatfirrn that I have not been barred from presenting evidence or testimony by the Office of Professional Responsibility Sign Here I Signature Business address (including room or suite no.) Title Date ldentifying number City or town, state, and ZIP code Part IV Donee Acknowledgment To be completed by the charitable organization This charitable organization acknowledges thal it is a qualified organization under section 170(c) and that it received the donaled property as doscribed in Soction B, Part I, above on the following date Furthermore, this orgarization affims that in the event it sells, exchanges, or otherwise cisposes of the property described in Section B, Part I (or any portion thereof) within 3 years after the date of receipt, it will file Form 8282, Donee Information Return, with the IRS and give the donor a copy of that form. This acknowiedgment does not represent agreement with the claimed fair market value Doos the organization intend to use the property for an unrelatod use? Name of charitable organization (donee) YesNo Employer identification number ddess (number, stree, and room or suite no.) City or town, state, and ZIP code Authoized signature Title UYA 04/09/2017 02:04:45 PM Form 8283 (Rev. 12-2014)

Brandon and Kara Arnold Schedule E -Condominium 000-00-2222 Taxpayer is making the election to capitalize repair and maintenance costa under Reg. 1.263 (a)-3 (n) (2) https://www.coursehero.com file/25111791 Brandon-and-Kara-Amold-2014-Tax-Returnpds 04/09/2017 02:04:45 PM