Question

Tax Form/ Return Preparation Problem Sally W. Emanual, a teacher, had the following dividends and interest...

Tax Form/ Return Preparation Problem

Sally W. Emanual, a teacher, had the following dividends and interest during the current year

Acorn Corporation bonds interest                                    $ 700

City of Boston bonds interest                                               1,000

Camp Bank interest                                                                1,250

Jet Corporation dividend (qualified).                                   1300

North Mutual funds

                Capital gain distribution                    100

                Ordinary dividend (qualified)            150

                Nontaxable distribution                      200                   450

Blue Corporation foreign dividend                                             250

Additional information pertaining to Sally Emanual includes

Salary                                                                                          70,000

Rent income                                                                                12,000

Expenses related to rent income                                             14,000

Pension benefits                                                                            7,000

Taxable alimony paid to Sally                                                       4,000

The taxable portion of the pension is $7,000. Sally actively participates in the rental activity. Other relevant information includes
Address: 430 Rumsey Place, West Falls, California 92699

Occupation: Credit manager

Social Security number:    123-45-6789

Marital status:     Single

Complete Sally’s Schedule 1, Schedule B and compute her taxable income on Form 1040. Assume Schedule E has already been prepared.

Explain each step.

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Answer #1

SCHEDULE -B (FORM 1040)

INTEREST AND ORDINARY DIVIDENDS
PARTICULARS. $

acorn corporation bond interest. 700
City of Boston bond interest. 1000

Camp bank interest. 1300

Total. 3000

Less : interest on EE Us saving NIL

Bonds issued after 1989

Total. 3000

PART -2 ORDINARY DIVIDEND

Capital gain distribution. 100

Ordinary dividend (qualified). 150

Non taxable distribution. 200

Blue corporation foreign dividend. 250

Total. 700

SCHEDULE -1: ADDITIONAL INCONE AND ADJUSTMENTS TO INCOME

PART -1. ADDITIONAL INCOME

salary. $70000

Rent income. $12000

Total. $82000

PART -2 : ADJUSTMENT TO INCOME

Expenses related to rent income. $14000

Pension benefits. $7000

Taxable alimony paid to sally. $4000

Total. $25000

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