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. 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.
Calculate Roberta’s net tax payable or refund due for 2018. Use
the appropriate forms and schedules.