Tax Year: 2016 (do not use 2017 rates) Taxpayer information: Name: Evan McCowan
ID: 2568374 • Letter: T
Question
Tax Year: 2016 (do not use 2017 rates)
Taxpayer information:
Name: Evan McCowan
Age: 37
Address: 1623 Greenbriar Lane, Sacramento, CA 95841
Social Security Number: 877-23-5130
Employment and earnings information:
Manager of a local automotive repair shop
Earnings: $69,000
Federal Income Tax withheld: $14,800
State Income Tax withheld: $ 2,300
Other income:
Qualifying dividends $4,400 Source: Ten Mile Creek Corporation Stock
Interest $5,205 Source: Long Term Certificate of Deposit at
1st National Bank of Sacramento
Evan received a Form 1099-B from his brokerage company for the following 2016 stock transactions:
Stock
# shs sold
Acquired
Sold
Price
Basis
Raven Co.
220 shs
2/01/2006
10/05/2016
5,400
2,500
Grayson, Co.
100 shs
6/11/2016
8/03/2016
4,000
5,000
Bison, Co.
150 shs
12/12/2015
9/22/2016
6,300
5,000
West, Co.
80 shs
5/12/2005
10/15/2016
7,000
4,000
Blackwater, Co.
115 shs
9/15/2009
11/01/2016
5,500
6,800
2016 Expenditures (all of which can be substantiated) – You decide what is deductible and where it should be reported:
Home mortgage interest $10,600
Credit card interest $ 550
Auto loan interest $ 1,700
Life insurance (universal policy) $ 750
Property taxes – personal residence $ 1,150
Doctor office visits – copay (out of pocket/not reimbursed) $ 650
Other medical expenses $ 790
Income tax preparation fee $ 250
Cash contributions – American Heart Association $ 575
Complete Evan McCowan’s federal tax return for 2016
Use Form 1040, Schedule A, Schedule B, Schedule D, Form 8949, and the Qualified Dividends and Capital Gain worksheet.
This taxpayer is not subject to AMT.
Make realistic assumptions about any missing data – but do not change the amounts given on the following page.
Use 2016 rates.
All pages must be in order: 1040, Sch A, Sch B, Sch D, Form 8949, Qualified Dividends and Capital Gains worksheet. All pages must be vertical and right side up.
Stock
# shs sold
Acquired
Sold
Price
Basis
Raven Co.
220 shs
2/01/2006
10/05/2016
5,400
2,500
Grayson, Co.
100 shs
6/11/2016
8/03/2016
4,000
5,000
Bison, Co.
150 shs
12/12/2015
9/22/2016
6,300
5,000
West, Co.
80 shs
5/12/2005
10/15/2016
7,000
4,000
Blackwater, Co.
115 shs
9/15/2009
11/01/2016
5,500
6,800
Explanation / Answer
Evan Mc cown Salary $69,000 Schedule A Property Taxes Personal residence ($1,150) Home Mortgagae interest ($10,600) Other medical expensess ($790) Income Tax preparation Fees ($250) Cash Contribution( American Heart Association) ($575) State Income tax withheld ($2,300) Federal tax deductions ($14,800) ($30,465) Doctor office visit Copay (10% of total dedcution accrding to 2013) ($650) ($650) Taxable Income $37,885 Schedule B(Reports qualifying dividend & Interest more than $1500 5% for lower bracket Qualifying dividends $4,400 Interest $5,025 $9425- $1500 =$7925 *5% $9,425 396.25 Schedule D Capital gain long term capital gain (15%) $7,200 Capital loss deductible upto $3000 ($2,300) $735 Non Tax deductibles Credit Card Intrest $550 Auto Loan intrest $1,700 Taxable income $39,016 (-) Tax 15% single filer $9,275 to $37,650 $5,852.44 Stock # shs sold Acquired Sold Price Basis Capital gain Raven Co. 220 shs 2/1/2006 10/5/2016 $5,400 $2,500 $2,900 Grayson, Co. 100 shs 6/11/2016 8/3/2016 $4,000 $5,000 ($1,000) Bison, Co. 150 shs 12/12/2015 9/22/2016 $6,300 $5,000 $1,300 West, Co. 80 shs 5/12/2005 10/15/2016 $7,000 $4,000 $3,000 Blackwater, Co. 115 shs 9/15/2009 11/1/2016 $5,500 $6,800 ($1,300)
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