Note: This problem is for the 2018 tax year. Roberta Santos, age
41, is single and lives at 120 Sanborne Avenue, Springfield, IL
60781. Her Social Security number is 123-45-6789. Roberta has been
divorced from her former husband, Wayne, for three years. She has a
son, Jason, who is 17, and a daughter, June, who is 18. Jason's
Social Security number is 111-11-1112, and June's is 123-45-6788.
Roberta does not want to contribute $3 to the Presidential Election
Campaign Fund. Roberta, an advertising executive, earned a salary
from ABC Advertising of $80,000 in 2018. Her employer withheld
$9,000 in Federal income tax and $3,100 in state income tax.
Roberta has legal custody of Jason and June. The divorce decree
provides that Roberta is to receive the dependency deductions for
the children. Jason lives with his father during summer vacation.
Wayne indicates that his expenses for Jason are $5,500. Roberta can
document that she spent $6,500 for Jason's support during 2018. In
prior years, Roberta gave a signed Form 8332 to Wayne regarding
Jason. For 2018, she has decided not to do so. Roberta provides all
of June's support. Roberta's mother died on January 7, 2018.
Roberta inherited assets worth $625,000 from her mother. As the
sole beneficiary of her mother's life insurance policy, Roberta
received insurance proceeds of $300,000. Her mother's cost basis
for the life insurance policy was $120,000. Roberta's favorite aunt
gave her $13,000 for her birthday in October. On November 8, 2018,
Roberta sells for $22,000 Amber stock that she had purchased for
$24,000 from her first cousin, Walt, on December 5, 2012. Walt's
cost basis for the stock was $26,000, and the stock was worth
$23,000 on December 5, 2014. On December 1, 2018, Roberta sold
Falcon stock for $13,500. She had acquired the stock on July 2,
2014, for $8,000. An examination of Roberta's records reveals that
she received the following: Interest income of $2,500 from First
Savings Bank. Groceries valued at $750 from Kroger Groceries for
being the 100,000th customer. Qualified dividend income of $1,800
from Amber. Interest income of $3,750 on City of Springfield school
bonds. Alimony of $16,000 from Wayne. Distribution of $4,800 from
ST Partnership. Her distributive share of the partnership passive
taxable income was $5,300. She had no prior passive activity losses
during 2012. Assume that the qualified business income deduction
applies and the W–2 wage limitation does not apply. From her
checkbook records, she determines that she made the following
payments during 2018: Charitable contributions of $4,500 to First
Presbyterian Church and $1,500 to the American Red Cross (proper
receipts obtained). Paid $5,000 to ECM Hospital for the medical
expenses of a friend from work. Mortgage interest on her residence
of $7,800 to Peoples Bank. Property taxes of $3,200 on her
residence and $1,100 (ad valorem) on her car. $800 for landscaping
expenses for residence. Estimated Federal income taxes of $2,800
and estimated state income taxes of $1,000. Medical expenses of
$5,000 for her and $800 for Jason. In December, her medical
insurance policy reimbursed $1,500 of her medical expenses. A
$1,000 ticket for parking in a handicapped space. Attorney's fees
of $500 associated with unsuccessfully contesting the parking
ticket. Contribution of $250 to the campaign of a candidate for
governor. Because she did not maintain records of the sales tax she
paid, she calculates the amount from the sales tax table to be
$994. Required: Calculate Roberta's net tax payable or refund due
for 2018. Assume a qualifying dividend and net capital gain rate of
15% rate. Enter all amounts as positive numbers. If an amount box
does not require an entry or the answer is zero, enter "0". Make
realistic assumptions about any missing data. It may be necessary
to complete the tax schedules before completing Form 1040. When
computing the tax liability, do not round your immediate
calculations. If required round your final answers to the nearest
dollar. Use the Tax Rate Schedule provided. Do not use the Tax
Tables.