Question

Prepare a tax return for Bella Maria. Bella is a single tax payer and a regular...

Prepare a tax return for Bella Maria.

Bella is a single tax payer and a regular wage earner.

Her W-2 gross income from being an office manager was $72,000; federal withholding was $13,000; and state withholding was $1,800.

Address: 305 College Drive, Olney, IL 62450

SS#: 303-32-0011

DOB: 12-01-1975

Bella Marie was covered by health insurance with her employer.

Alimony she received $8,200 (ex-husband is Bob ss# 302-32-2143)

She also had a lot she rented a building to someone for 12 months at $1100 per month. Insurance was $600 for the year and Real Estate Taxes were $2400.

Other income: dividends received on Apple stock of $2,600 and interest on saving account at First Bank of $3500. During the current year she received a $1,750 refund from last years Illinois state income tax. She itemized deductions on last years tax return.

During the current year, she paid the following amounts (all of which can be substantiated):

Home mortgage interest $6,000

Credit card interest $2,550 (personal)

Auto loan interest $5,700 (personal)

Life insurance paid (universal policy) $750

Property taxes on personal residence $6,000

Blue Cross medical bills $5,500

Traditional IRA contribution $2,000

Other medicine expenses $1,500

Income tax preparation fee $250

Charitable contributions (in cash) $1,500

Avery has several stock sales. Below are the transactions.

Stock

Bought

Sold

Sales Price

Cost

Lilly Co.

2/01/17

12/05/17

$8,000

$7,500

Green Grass Co.

6/11/14

09/01/17

$4,000

$3,500

Snow Co.

3/12/01

12/22/17

$3,000

$5,000

Miles Co.

5/12/16

01/15/17

$6,000

$8,000

Hill Co.

9/15/15

01/01/17

$10,000

$17,000

Homework Answers

Answer #1

Solution: Please note

  1. We have not considered credit card interest and auto loan interest since it's personal in nature and not deductible .
  2. We have considered stock sale transaction as covered transaction since no information provided so we have considered as short and long term transaction as covered we assume that Form:1099-B is Received . And Form:8949 updated year 2018 since 2017 year form not available since all other information are same in Form:8949 only tax year is changed.

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