Comprehensive Problem 5-86 (LO 5-1, LO 5-2, LO 5-3)
[The following information applies to the questions
displayed below.]
Ken is 63 years old and unmarried. He retired at age 55 when he
sold his business, Understock.com. Though Ken is retired, he is
still very active. Ken reported the following financial information
this year. Assume Ken files as a single taxpayer.
- Ken won $1,200 in an illegal game of poker (the game was played
in Utah, where gambling is illegal).
- Ken sold 1,000 shares of stock for $32 a share. He inherited
the stock two years ago. His tax basis (or investment) in the stock
was $31 per share.
- Ken received $25,000 from an annuity he purchased eight years
ago. He purchased the annuity, to be paid annually for 20 years,
for $210,000.
- Ken received $13,000 in disability benefits for the year. He
purchased the disability insurance policy last year.
- Ken decided to go back to school to learn about European
history. He received a $500 cash scholarship to attend. He used
$300 to pay for his books and tuition, and he applied the rest
toward his new car payment.
- Ken’s son, Mike, instructed his employer to make half of his
final paycheck of the year payable to Ken as a gift from Mike to
Ken. Ken received the check on December 30 in the amount of
$1,100.
- Ken received a $610 refund of the $3,600 in state income taxes
his employer withheld from his pay last year. Ken claimed $12,050
in itemized deductions last year (the standard deduction for a
single filer was $12,000).
- Ken received $30,000 of interest from corporate bonds and money
market accounts.
Comprehensive Problem 5-86 Part b-1 [MUST MANUALLY GRADE]
b-1 Complete page 2 of Form 1040 (through line
6) for Ken.
Please right click on the attached Adobe document and
select open in new window. Then, download the Tax Form and enter
the required values in the appropriate fields. Save your completed
Tax Form to your computer and then upload it here by clicking
"Browse." Next, click "Save." (Use 2019 tax rules regardless of
year on tax form.)