- Review Gaytor’s 2023 return (Cumulative Problem at the end of chapter) and its related tax return solution (Attatched to this) Explain the tax law relating to Allison’s purchase of building and how it was reported in the tax return.What kind of assets that was purchased? — 1231, 1245, and/or 1250? Explain.What is the depreciable method (SL? MACRS?). What is the convention (mid-month, mid-year, or mid-quarter)? Explain.What is the depreciable life (years) and rate (%). How do you get that?Summarize how is that information is being reported and flow from the originated form to the 1040 of Gaytor tax return?
- After you finished preparing Gaytor’s return (as represented in the disclosed return), Gaytor profusedly apologize and said, oops, “I forgot to let you know the following (below).” How much is the current year depreciation, assuming that the maximum 179 is taken (no bonus depreciation considered). Gaytor purchased the following : **FYI. Scenario under Question #2 is NOT part of the Gaytor’s return in the textbook. These are the additional information. Also, for simplicity, let’s use $53,000 as taxable income for the calculation of 179 threshold limitation. Machinery, purchased Jan. 25, $90,000Computers & server, purchased July 25, $95,000Commercial Bldg$275/Land $100, purchased April 22, $375,000
- Since the purpose of tax is about incentivizing certain behavior (in such case, more purchasing of capital assets to spawn investments and economic growth), discuss some laws / tax credits that incentivize such behavior.
Chapter 6– Cumulative Software Problem Answer
6-1
Form
Comprehensive Problem 2
1040 U.S. Individual Income Tax Return 2023
Department of the Treasury—Internal Revenue Service
For the year Jan. 1–Dec. 31, 2023, or other tax year beginning
OMB No. 1545-0074
IRS Use Only—Do not write or staple in this space.
, 2023, ending
Your first name and middle initial
, 20
See separate instructions.
Last name
Albert T.
Your social security number
Gaytor
If joint return, spouse’s first name and middle initial
266 51 1966
Last name
Spouse’s social security number
TREASURY/IRS
AND OMB USE
ONLY DRAFT
June 15, 2023
DO NOT FILE
Allison A.
Gaytor
266 34 1967
Home address (number and street). If you have a P.O. box, see instructions.
Apt. no.
Presidential Election Campaign
Check here if you, or your
spouse if filing jointly, want $3
ZIP code
to go to this fund. Checking a
box below will not change
Foreign postal code your tax or refund.
12340 Cocoshell Road
City, town, or post office. If you have a foreign address, also complete spaces below.
State
Coral Gables
FL
Foreign country name
33134
Foreign province/state/county
You
Single
X Married filing jointly (even if only one had income)
Filing Status
Check only
one box.
Digital
Assets
Standard
Deduction
Married filing separately (MFS)
Qualifying surviving spouse (QSS)
If you checked the MFS box, enter the name of your spouse. If you checked the HOH or QSS box, enter the child’s name if the
qualifying person is a child but not your dependent:
At any time during 2023, did you: (a) receive (as a reward, award, or payment for property or services); or (b) sell,
exchange, or otherwise dispose of a digital asset (or a financial interest in a digital asset)? (See instructions.)
.
Were born before January 2, 1959
Are blind
Dependents (see instructions):
Income
Spouse:
(1) First name
Last name
(2) Social security
number
Crocker
Gaytor
261 55 1212
Was born before January 2, 1959
Child tax credit
Credit for other dependents
Son
Total amount from Form(s) W-2, box 1 (see instructions) .
Household employee wages not reported on Form(s) W-2 .
Tip income not reported on line 1a (see instructions) . .
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1a
1b
1c
d
e
f
Medicaid waiver payments not reported on Form(s) W-2 (see instructions) .
Taxable dependent care benefits from Form 2441, line 26
. . . . .
Employer-provided adoption benefits from Form 8839, line 29
. . . .
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1d
1e
1f
If you did not
get a Form
W-2, see
instructions.
g
h
i
Wages from Form 8919, line 6 . . . . . . .
Other earned income (see instructions) . . . .
Nontaxable combat pay election (see instructions) .
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1i
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1g
1h
z
2a
3a
Add lines 1a through 1h
Tax-exempt interest . .
Qualified dividends . .
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.
.
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.
.
Attach Sch. B
if required.
. . . . . . .
b Taxable interest
.
b Ordinary dividends .
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1z
2b
3b
4a
5a
6a
IRA distributions . . .
Pensions and annuities .
Social security benefits .
.
.
.
b Taxable amount .
b Taxable amount .
b Taxable amount .
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4b
5b
6b
c
7
8
If you elect to use the lump-sum election method, check here (see instructions)
Capital gain or (loss). Attach Schedule D if required. If not required, check here
Additional income from Schedule 1, line 10 . . . . . . . . . . .
.
.
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X
.
7
8
9
10
11
Add lines 1z, 2b, 3b, 4b, 5b, 6b, 7, and 8. This is your total income .
Adjustments to income from Schedule 1, line 26
. . . . . .
Subtract line 10 from line 9. This is your adjusted gross income
.
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9
10
11
12
13
14
15
Standard deduction or itemized deductions (from Schedule A)
. . . . .
Qualified business income deduction from Form 8995 or Form 8995-A . . . .
Add lines 12 and 13 . . . . . . . . . . . . . . . . . . .
Subtract line 14 from line 11. If zero or less, enter -0-. This is your taxable income
.
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.
12
13
14
Standard
Deduction for—
• Single or
Married filing
separately,
$13,850
• Married filing
jointly or
Qualifying
surviving spouse,
$27,700
• Head of
household,
$20,800
• If you checked
any box under
Standard
Deduction,
see instructions.
.
. .
2a
3a
4a
5a
6a
.
.
.
.
810
1,400
.
.
.
.
.
.
.
.
.
For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions.
.
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.
Is blind
(4) Check the box if qualifies for (see instructions):
(3) Relationship
to you
1a
b
c
Attach Form(s)
W-2 here. Also
attach Forms
W-2G and
1099-R if tax
was withheld.
X No
Yes
Someone can claim:
You as a dependent
Your spouse as a dependent
Spouse itemizes on a separate return or you were a dual-status alien
Age/Blindness You:
If more
than four
dependents,
see instructions
and check
here . .
Spouse
Head of household (HOH)
Cat. No. 11320B
15
X
69,150
69,150
1,119
1,677
6,650
30,766
109,362
28,559
80,803
28,996
2,786
31,782
49,021
Form 1040 (2023)
Chapter 6– Cumulative Software Problem Answer
6-2
Comprehensive Problem 2, cont.
Page 2
Form 1040 (2023)
Tax and
Credits
Payments
If you have a
qualifying child,
attach Sch. EIC.
Refund
Tax (see instructions). Check if any from Form(s): 1
8814
Amount from Schedule 2, line 3
. . . . . . . .
Third Party
Designee
.
.
.
18
19
20
Add lines 16 and 17 . . . . . . . . . . . . . . .
Child tax credit or credit for other dependents from Schedule 8812 .
Amount from Schedule 3, line 8
. . . . . . . . . . .
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21
22
23
24
Add lines 19 and 20 . . . . . . . . . . . . . . .
Subtract line 21 from line 18. If zero or less, enter -0- . . . . .
Other taxes, including self-employment tax, from Schedule 2, line 21
Add lines 22 and 23. This is your total tax . . . . . . . .
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25
a
Federal income tax withheld from:
Form(s) W-2 . . . . . . .
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.
.
.
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.
.
.
25a
b
c
d
Form(s) 1099 . . . . . .
Other forms (see instructions) .
Add lines 25a through 25c . .
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25b
25c
. . .
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.
26
27
28
2023 estimated tax payments and amount applied from 2022 return .
Earned income credit (EIC) . . . . . . . . . . . . .
Additional child tax credit from Schedule 8812
. . . . . . .
.
.
.
.
.
.
.
.
29
30
31
American opportunity credit from Form 8863, line 8 .
Reserved for future use . . . . . . . . .
Amount from Schedule 3, line 15 . . . . . .
.
.
.
32
33
Add lines 27, 28, 29, and 31. These are your total other payments and refundable credits
Add lines 25d, 26, and 32. These are your total payments
. . . . . . . . . .
.
.
.
.
34
If line 33 is more than line 24, subtract line 24 from line 33. This is the amount you overpaid
.
.
32
33
34
35a
b
d
36
Amount of line 34 you want refunded to you. If Form 8888 is attached, check here .
Routing number
c Type:
Checking
Account number
Amount of line 34 you want applied to your 2024 estimated tax . . .
36
37
Subtract line 33 from line 24. This is the amount you owe.
For details on how to pay, go to www.irs.gov/Payments or see instructions .
.
38
Estimated tax penalty (see instructions)
38
.
.
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.
.
Joint return?
See instructions.
Keep a copy for
your records.
.
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27
28
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16
17
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18
19
20
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21
22
23
4,477
4,477
500
24
500
3,977
2,118
6,095
.
25d
7,282
.
26
5,492
240
1,550
29
30
31
.
Phone
no.
.
.
.
.
.
Savings
35a
.
.
.
37
.
Yes. Complete below.
7,282
1,187
1,187
No
Personal identification
number (PIN)
Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and
belief, they are true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.
Your signature
Date
Your occupation
Spouse’s signature. If a joint return, both must sign.
Date
Spouse’s occupation
Boat Captain
Auto Parts Store Owner
Phone no.
Paid
Preparer
Use Only
.
4972 3
. . . .
Do you want to allow another person to discuss this return with the IRS? See
instructions
. . . . . . . . . . . . . . . . . . . . .
Designee’s
name
Sign
Here
2
TREASURY/IRS
AND OMB USE
ONLY DRAFT
June 15, 2023
DO NOT FILE
Direct deposit?
See instructions.
Amount
You Owe
16
17
Preparer’s name
If the IRS sent you an Identity
Protection PIN, enter it here
(see inst.)
If the IRS sent your spouse an
Identity Protection PIN, enter it here
(see inst.)
Email address
Preparer’s signature
Date
PTIN
Check if:
Self-employed
Firm’s name
Phone no.
Firm’s address
Firm’s EIN
Go to www.irs.gov/Form1040 for instructions and the latest information.
Form 1040 (2023)
Chapter 6 – Cumulative Software Problem Answer
SCHEDULE 1
(Form 1040)
Department of the Treasury
Internal Revenue Service
6-3
2023
Attach to Form 1040, 1040-SR, or 1040-NR.
Go to www.irs.gov/Form1040 for instructions and the latest information.
Name(s) shown on Form 1040, 1040-SR, or 1040-NR
Attachment
Sequence No. 01
Your social security number
Albert T. and Allison A. Gaytor
Part I Additional Income
1
2a
b
3
4
5
6
7
8
a
b
c
d
e
f
g
h
i
j
k
l
OMB No. 1545-0074
Additional Income and Adjustments to Income
266-51-1966
TREASURY/IRS
AND OMB USE
ONLY DRAFT
August 18, 2023
DO NOT FILE
Taxable refunds, credits, or offsets of state and local income taxes . . . . . . . . .
1
Alimony received . . . . . . . . . . . . . . . . . . . . . . . . . . .
2a
Date of original divorce or separation agreement (see instructions):
Business income or (loss). Attach Schedule C . . . . . . . . . . . . . . . . .
3
Other gains or (losses). Attach Form 4797 . . . . . . . . . . . . . . . . . .
4
Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E .
5
Farm income or (loss). Attach Schedule F . . . . . . . . . . . . . . . . . . .
6
Unemployment compensation . . . . . . . . . . . . . . . . . . . . . . .
7
Other income:
)
Net operating loss . . . . . . . . . . . . . . . . . . .
8a (
Gambling . . . . . . . . . . . . . . . . . . . . . .
8b
5,650
Cancellation of debt . . . . . . . . . . . . . . . . . .
8c
)
Foreign earned income exclusion from Form 2555 . . . . . . .
8d (
Income from Form 8853 . . . . . . . . . . . . . . . . .
8e
Income from Form 8889 . . . . . . . . . . . . . . . . .
8f
Alaska Permanent Fund dividends . . . . . . . . . . . . .
8g
Jury duty pay . . . . . . . . . . . . . . . . . . . . .
8h
Prizes and awards . . . . . . . . . . . . . . . . . . .
8i
Activity not engaged in for profit income . . . . . . . . . . .
8j
150
Stock options . . . . . . . . . . . . . . . . . . . . .
8k
Income from the rental of personal property if you engaged in the rental
for profit but were not in the business of renting such property . . .
8l
m Olympic and Paralympic medals and USOC prize money (see
instructions) . . . . . . . . . . . . . . . . . . . . .
8m
n Section 951(a) inclusion (see instructions) . . . . . . . . . .
8n
o Section 951A(a) inclusion (see instructions) . . . . . . . . . .
8o
p Section 461(l) excess business loss adjustment . . . . . . . .
8p
q Taxable distributions from an ABLE account (see instructions) . . .
8q
r Scholarship and fellowship grants not reported on Form W-2 . . .
8r
s Nontaxable amount of Medicaid waiver payments included on Form
)
1040, line 1a or 1d . . . . . . . . . . . . . . . . . . .
8s (
t Pension or annuity from a nonqualifed deferred compensation plan or
a nongovernmental section 457 plan . . . . . . . . . . . .
8t
u Wages earned while incarcerated . . . . . . . . . . . . .
8u
z Other income. List type and amount:
8z
9 Total other income. Add lines 8a through 8z . . . . . . . . . . . . . . . . . .
9
10 Combine lines 1 through 7 and 9. This is your additional income. Enter here and on Form
1040, 1040-SR, or 1040-NR, line 8 . . . . . . . . . . . . . . . . . . . . .
10
For Paperwork Reduction Act Notice, see your tax return instructions.
Cat. No. 71479F
14,991
6,000
3,975
5,800
30,766
Schedule 1 (Form 1040) 2023
Chapter 6 – Cumulative Software Problem Answer
Albert T. and Allison A. Gaytor
Part II Adjustments to Income
Schedule 1 (Form 1040) 2023
11
12
13
14
15
16
17
18
19a
b
c
20
21
22
23
24
a
b
c
d
e
f
g
h
i
j
k
z
25
26
6-4
266-51-1966
Page 2
11
Educator expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .
Certain business expenses of reservists, performing artists, and fee-basis government
12
officials. Attach Form 2106 . . . . . . . . . . . . . . . . . . . . . . . .
Health savings account deduction. Attach Form 8889 . . . . . . . . . . . . . .
13
Moving expenses for members of the Armed Forces. Attach Form 3903 . . . . . . .
14
Deductible part of self-employment tax. Attach Schedule SE . . . . . . . . . . .
15
Self-employed SEP, SIMPLE, and qualified plans . . . . . . . . . . . . . . . .
16
Self-employed health insurance deduction . . . . . . . . . . . . . . . . . .
17
Penalty on early withdrawal of savings . . . . . . . . . . . . . . . . . . . .
18
Alimony paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19a
Recipient’s SSN . . . . . . . . . . . . . . . . . . . . . . 667 34 9224
7/1/2017
Date of original divorce or separation agreement (see instructions):
IRA deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20
Student loan interest deduction . . . . . . . . . . . . . . . . . . . . . .
21
22
Reserved for future use . . . . . . . . . . . . . . . . . . . . . . . . .
Archer MSA deduction . . . . . . . . . . . . . . . . . . . . . . . . .
23
Other adjustments:
Jury duty pay (see instructions) . . . . . . . . . . . . . .
24a
Deductible expenses related to income reported on line 8l from the
rental of personal property engaged in for profit . . . . . . . .
24b
Nontaxable amount of the value of Olympic and Paralympic medals
and USOC prize money reported on line 8m . . . . . . . . . .
24c
Reforestation amortization and expenses . . . . . . . . . . .
24d
Repayment of supplemental unemployment benefits under the Trade
Act of 1974 . . . . . . . . . . . . . . . . . . . . . .
24e
Contributions to section 501(c)(18)(D) pension plans . . . . . . .
24f
Contributions by certain chaplains to section 403(b) plans . . . .
24g
Attorney fees and court costs for actions involving certain unlawful
discrimination claims (see instructions) . . . . . . . . . . . .
24h
Attorney fees and court costs you paid in connection with an award
from the IRS for information you provided that helped the IRS detect
tax law violations . . . . . . . . . . . . . . . . . . .
24i
Housing deduction from Form 2555 . . . . . . . . . . . . .
24j
Excess deductions of section 67(e) expenses from Schedule K-1 (Form
1041) . . . . . . . . . . . . . . . . . . . . . . . .
24k
Other adjustments. List type and amount:
24z
Total other adjustments. Add lines 24a through 24z . . . . . . . . . . . . . . .
25
Add lines 11 through 23 and 25. These are your adjustments to income. Enter here and on
Form 1040, 1040-SR, or 1040-NR, line 10 . . . . . . . . . . . . . . . . . .
26
TREASURY/IRS
AND OMB USE
ONLY DRAFT
August 18, 2023
DO NOT FILE
1,059
12,000
13,000
2,500
28,559
Schedule 1 (Form 1040) 2023
Chapter 6 – Cumulative Software Problem Answer
SCHEDULE 2
OMB No. 1545-0074
Additional Taxes
(Form 1040)
Department of the Treasury
Internal Revenue Service
6-5
2023
Attach to Form 1040, 1040-SR, or 1040-NR.
Go to www.irs.gov/Form1040 for instructions and the latest information.
Name(s) shown on Form 1040, 1040-SR, or 1040-NR
Attachment
Sequence No. 02
Your social security number
Albert T. and Allison A. Gaytor
Part I Tax
266-51-1966
TREASURY/IRS
AND OMB USE
ONLY DRAFT
June 15, 2023
DO NOT FILE
1
Alternative minimum tax. Attach Form 6251 . . . . . . . . . . . . . . . .
1
2
Excess advance premium tax credit repayment. Attach Form 8962 . . . . . . .
2
3
Add lines 1 and 2. Enter here and on Form 1040, 1040-SR, or 1040-NR, line 17 . .
3
Part II Other Taxes
4
Self-employment tax. Attach Schedule SE . . . . . . . . . . . . . . . . .
5
Social security and Medicare tax on unreported tip income.
Attach Form 4137 . . . . . . . . . . . . . . . . . .
5
6
Uncollected social security and Medicare tax on wages. Attach
Form 8919 . . . . . . . . . . . . . . . . . . . . .
6
7
Total additional social security and Medicare tax. Add lines 5 and 6
8
Additional tax on IRAs or other tax-favored accounts. Attach Form 5329 if required.
. . . . . .
4
7
If not required, check here . . . . . . . . . . . . . . . . . . . . .
8
9
Household employment taxes. Attach Schedule H
. . . . . . . . . . . . .
9
10
Repayment of first-time homebuyer credit. Attach Form 5405 if required . . . . .
10
11
Additional Medicare Tax. Attach Form 8959 . . . . . . . . . . . . . . . .
11
12
Net investment income tax. Attach Form 8960 . . . . . . . . . . . . . . .
12
13
Uncollected social security and Medicare or RRTA tax on tips or group-term life
insurance from Form W-2, box 12 . . . . . . . . . . . . . . . . . . . .
13
14
Interest on tax due on installment income from the sale of certain residential lots
and timeshares . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14
15
Interest on the deferred tax on gain from certain installment sales with a sales price
over $150,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15
Recapture of low-income housing credit. Attach Form 8611 . . . . . . . . . .
16
16
2,118
(continued on page 2)
For Paperwork Reduction Act Notice, see your tax return instructions.
Cat. No. 71478U
Schedule 2 (Form 1040) 2023
Chapter 6 – Cumulative Software Problem Answer
Albert T. and Allison A. Gaytor
Part II Other Taxes (continued)
Schedule 2 (Form 1040) 2023
17
6-6
266-51-1966
Page 2
Other additional taxes:
a Recapture of other credits. List type, form number, and amount:
17a
TREASURY/IRS
AND OMB USE
ONLY DRAFT
June 15, 2023
DO NOT FILE
b Recapture of federal mortgage subsidy, if you sold your home
see instructions . . . . . . . . . . . . . . . . . . . 17b
c Additional tax on HSA distributions. Attach Form 8889 . . . .
17c
d Additional tax on an HSA because you didn’t remain an eligible
individual. Attach Form 8889 . . . . . . . . . . . . . . 17d
e Additional tax on Archer MSA distributions. Attach Form 8853 .
17e
f Additional tax on Medicare Advantage MSA distributions. Attach
Form 8853 . . . . . . . . . . . . . . . . . . . . .
17f
g Recapture of a charitable contribution deduction related to a
fractional interest in tangible personal property . . . . . . . 17g
h Income you received from a nonqualified deferred compensation
plan that fails to meet the requirements of section 409A . . . 17h
i Compensation you received from a nonqualified deferred
compensation plan described in section 457A . . . . . . .
17i
j
Section 72(m)(5) excess benefits tax . . . . . . . . . . .
k Golden parachute payments
l
17j
. . . . . . . . . . . . . .
17k
Tax on accumulation distribution of trusts . . . . . . . . .
17l
m Excise tax on insider stock compensation from an expatriated
corporation . . . . . . . . . . . . . . . . . . . . . 17m
n Look-back interest under section 167(g) or 460(b) from Form
8697 or 8866 . . . . . . . . . . . . . . . . . . . . 17n
o Tax on non-effectively connected income for any part of the
year you were a nonresident alien from Form 1040-NR . . . . 17o
p Any interest from Form 8621, line 16f, relating to distributions
from, and dispositions of, stock of a section 1291 fund . . . . 17p
q Any interest from Form 8621, line 24 . . . . . . . . . . .
17q
z Any other taxes. List type and amount:
17z
18
Total additional taxes. Add lines 17a through 17z . . . . . . . . . . . . . .
18
19
Reserved for future use
19
20
21
Section 965 net tax liability installment from Form 965-A . . .
20
Add lines 4, 7 through 16, and 18. These are your total other taxes. Enter here and
on Form 1040 or 1040-SR, line 23, or Form 1040-NR, line 23b . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . .
21
2,118
Schedule 2 (Form 1040) 2023
Chapter 6 – Cumulative Software Problem Answer
6-7
Comprehensive Problem 2, cont.
Itemized Deductions
SCHEDULE A
(Form 1040)
Department of the Treasury
Internal Revenue Service
OMB No. 1545-0074
2023
Attach to Form 1040 or 1040-SR.
Go to www.irs.gov/ScheduleA for instructions and the latest information.
Name(s) shown on Form 1040 or 1040-SR
Your social security number
Albert T. and Allison A. Gaytor
Medical
and
Dental
Expenses
266-51-1966
TREASURY/IRS
AND OMB USE
ONLY DRAFT
June 15, 2023
DO NOT FILE
Taxes You
Paid
1
2
3
4
Caution: Do not include expenses reimbursed or paid by others.
Medical and dental expenses (see instructions) . . . . . . .
Enter amount from Form 1040 or 1040-SR, line 11 2
80,803
Multiply line 2 by 7.5% (0.075) . . . . . . . . . . . . .
Subtract line 3 from line 1. If line 3 is more than line 1, enter -0- . . .
5 State and local taxes.
a State and local income taxes or general sales taxes. You may include
either income taxes or general sales taxes on line 5a, but not both. If
you elect to include general sales taxes instead of income taxes,
x
check this box . . . . . . . . . . . . . . . . .
b State and local real estate taxes (see instructions) . . . . . . .
c State and local personal property taxes . . . . . . . . . .
d Add lines 5a through 5c . . . . . . . . . . . . . . .
e Enter the smaller of line 5d or $10,000 ($5,000 if married filing
separately) . . . . . . . . . . . . . . . . . . .
6 Other taxes. List type and amount:
7 Add lines 5e and 6
Interest
You Paid
Attachment
Sequence No. 07
Caution: If you are claiming a net qualified disaster loss on Form 4684, see the instructions for line 16.
Caution: Your
mortgage interest
deduction may be
limited. See
instructions.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
8,170
1
3
. .
Caution: If you
made a gift and
got a benefit for it,
see instructions.
.
.
.
10,750
5e
10,000
6
. .
8 Home mortgage interest and points. If you didn’t use all of your home
mortgage loan(s) to buy, build, or improve your home, see
instructions and check this box . . . . . . . . . .
a Home mortgage interest and points reported to you on Form 1098.
See instructions if limited . . . . . . . . . . . . . .
8a
b Home mortgage interest not reported to you on Form 1098. See
instructions if limited. If paid to the person from whom you bought the
home, see instructions and show that person’s name, identifying no.,
and address . . . . . . . . . . . . . . . . . . .
8b
4
2,110
7
10,000
10
10,386
14
850
15
0
3,750
7,000
5a
5b
5c
5d
.
.
.
.
10,111
c Points not reported to you on Form 1098. See instructions for special
8c
rules . . . . . . . . . . . . . . . . . . . . .
d Reserved for future use . . . . . . . . . . . . . . .
8d
e Add lines 8a through 8c . . . . . . . . . . . . . . .
8e
9 Investment interest. Attach Form 4952 if required. See instructions
9
10 Add lines 8e and 9 . . . . . . . . . . . . . . . . . . . .
Gifts to
Charity
6,060
.
11 Gifts by cash or check. If you made any gift of $250 or more, see
11
instructions . . . . . . . . . . . . . . . . . . .
12 Other than by cash or check. If you made any gift of $250 or more,
see instructions. You must attach Form 8283 if over $500 . . .
12
13 Carryover from prior year . . . . . . . . . . . . . .
13
14 Add lines 11 through 13 . . . . . . . . . . . . . . . . . .
10,111
275
.
.
.
.
600
250
.
.
.
.
Casualty and 15 Casualty and theft loss(es) from a federally declared disaster (other than net qualified
disaster losses). Attach Form 4684 and enter the amount from line 18 of that form. See
Theft Losses
instructions .
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
16 Other—from list in instructions. List type and amount:
Other
Gambling losses to the extent of winnings
Itemized
Deductions
16
17 Add the amounts in the far right column for lines 4 through 16. Also, enter this amount on
Total
17
Form 1040 or 1040-SR, line 12 . . . . . . . . . . . . . . . . . . . .
Itemized
Deductions 18 If you elect to itemize deductions even though they are less than your standard deduction,
check this box .
.
.
.
.
.
.
.
.
.
.
.
For Paperwork Reduction Act Notice, see the Instructions for Form 1040.
.
.
.
.
.
.
.
.
.
Cat. No. 17145C
.
.
5,650
28,996
.
Schedule A (Form 1040) 2023
Chapter 6 – Cumulative Software Problem Answer
SCHEDULE B
6-8
OMB No. 1545-0074
Interest and Ordinary Dividends
(Form 1040)
Department of the Treasury
Internal Revenue Service
2023
Attach to Form 1040 or 1040-SR.
Go to www.irs.gov/ScheduleB for instructions and the latest information.
Name(s) shown on return
Attachment
Sequence No. 08
Your social security number
Albert T. and Allison A. Gaytor
1
List name of payer. If any interest is from a seller-financed mortgage and the
Part I
buyer used the property as a personal residence, see the instructions and list this
Interest
interest first. Also, show that buyer’s social security number and address:
(See instructions
Vizcaya National Bank (from Chapter 1)
and the
Department of Treasury
Instructions for
Form 1040,
line 2b.)
266-51-1966
Amount
TREASURY/IRS
AND OMB USE
ONLY DRAFT
May 31, 2023
DO NOT FILE
Note: If you
received a
Form 1099-INT,
Form 1099-OID,
or substitute
statement from
a brokerage firm,
list the firm’s
name as the
payer and enter
the total interest
shown on that
form.
1
Accrued interest
2
3
Part II
Ordinary
Dividends
305
968
Add the amounts on line 1 . . . . . . . . . . . . . . . . . . .
Excludable interest on series EE and I U.S. savings bonds issued after 1989.
Attach Form 8815 . . . . . . . . . . . . . . . . . . . . . .
4
Subtract line 3 from line 2. Enter the result here and on Form 1040 or 1040-SR, line 2b
Note: If line 4 is over $1,500, you must complete Part III.
List name of payer:
5
2
3
4
1,119
Amount
Everglades Boating Corporation
Grapefruit Mutual Fund
(See instructions
and the
Instructions for
Form 1040,
line 3b.)
(154)
1,119
1,227
450
5
Note: If you
received a
Form 1099-DIV
or substitute
statement from
a brokerage firm,
list the firm’s
name as the
payer and enter
the ordinary
6
Add the amounts on line 5. Enter the total here and on Form 1040 or 1040-SR, line 3b
dividends shown
on that form.
Note: If line 6 is over $1,500, you must complete Part III.
6
1,677
Part III
You must complete this part if you (a) had over $1,500 of taxable interest or ordinary dividends; (b) had a foreign
account; or (c) received a distribution from, or were a grantor of, or a transferor to, a foreign trust.
Foreign
Accounts
Yes No
and Trusts 7a At any time during 2023, did you have a financial interest in or signature authority over a financial
Caution: If
required, failure to
file FinCEN Form
114 may result in
substantial
penalties.
Additionally, you
may be required
to file Form 8938,
Statement of
Specified Foreign
Financial Assets.
See instructions.
account (such as a bank account, securities account, or brokerage account) located in a foreign
country? See instructions . . . . . . . . . . . . . . . . . . . . . . . .
If “Yes,” are you required to file FinCEN Form 114, Report of Foreign Bank and Financial
Accounts (FBAR), to report that financial interest or signature authority? See FinCEN Form 114
and its instructions for filing requirements and exceptions to those requirements . . . . . .
x
b If you are required to file FinCEN Form 114, list the name(s) of the foreign country(-ies) where the
financial account(s) is (are) located:
8
During 2023, did you receive a distribution from, or were you the grantor of, or transferor to, a
foreign trust? If “Yes,” you may have to file Form 3520. See instructions . . . . . . . . .
For Paperwork Reduction Act Notice, see your tax return instructions.
Cat. No. 17146N
x
Schedule B (Form 1040) 2023
Chapter 6 – Cumulative Software Problem Answer
6-9
Comprehensive Problem 2, cont.
SCHEDULE C
(Form 1040)
Profit or Loss From Business
OMB No. 1545-0074
2023
(Sole Proprietorship)
Attach to Form 1040, 1040-SR, 1040-SS, 1040-NR, or 1041; partnerships must generally file Form 1065.
Department of the Treasury
Go to www.irs.gov/ScheduleC for instructions and the latest information.
Internal Revenue Service
Name of proprietor
Social security number (SSN)
Allison A. Gaytor
A
266-34-1967
TREASURY/IRS
AND OMB USE
ONLY DRAFT
July 27, 2023
DO NOT FILE
Principal business or profession, including product or service (see instructions)
B Enter code from instructions
4 4 1 3 0 0
Retail Store—Auto Accessories
C
Attachment
Sequence No. 09
Business name. If no separate business name, leave blank.
Toge Pass
D Employer ID number (EIN) (see instr.)
9 8 7 3 2 1 6 5 4
617 Crandon Boulevard
Key Biscayne, FL 33149
E
Business address (including suite or room no.)
F
G
City, town or post office, state, and ZIP code
(2)
Accrual
(3)
Other (specify)
Accounting method:
(1) x Cash
Did you “materially participate” in the operation of this business during 2023? If “No,” see instructions for limit on losses
.
H
I
J
If you started or acquired this business during 2023, check here . . . . . . . . . . .
Did you make any payments in 2023 that would require you to file Form(s) 1099? See instructions .
If “Yes,” did you or will you file required Form(s) 1099? . . . . . . . . . . . . . .
.
.
.
Part I
1
.
.
.
.
.
.
.
.
.
.
.
.
2
3
4
1
2
3
4
5
6
7
Gross profit. Subtract line 4 from line 3 . . . . . . . . . . . . . . . . .
Other income, including federal and state gasoline or fuel tax credit or refund (see instructions) .
Gross income. Add lines 5 and 6 . . . . . . . . . . . . . . . . . . .
.
.
.
5
6
7
Office expense (see instructions) .
Pension and profit-sharing plans .
18
19
Rent or lease (see instructions):
Vehicles, machinery, and equipment
Other business property . . .
20a
20b
Repairs and maintenance . . .
Supplies (not included in Part III) .
Taxes and licenses . . . . .
21
22
23
a
b
Travel and meals:
Travel . . . . . . . . .
Deductible meals (see instructions)
24a
24b
25
26
27a
Utilities . . . . . . . .
Wages (less employment credits)
Other expenses (from line 48) . .
25
26
27a
17
28
Other . . . . . .
16b
1,600
b Energy efficient commercial bldgs
Legal and professional services
17
deduction (attach Form 7205) . .
400
Total expenses before expenses for business use of home. Add lines 8 through 27b . . . . . . .
27b
28
29
Tentative profit or (loss). Subtract line 28 from line 7 .
29
30
Expenses for business use of your home. Do not report these expenses elsewhere. Attach Form 8829
unless using the simplified method. See instructions.
Simplified method filers only: Enter the total square footage of (a) your home:
Advertising .
9
Car and truck expenses
(see instructions) . . .
Commissions and fees .
Contract labor (see instructions)
.
.
.
.
12
13
Depletion . . . . .
Depreciation and section 179
expense
deduction
(not
included in Part III) (see
instructions)
. . . .
14
Employee benefit programs
(other than on line 19)
.
Insurance (other than health)
Interest (see instructions):
Mortgage (paid to banks, etc.)
15
16
a
b
x Yes
x
x Yes
x Yes
No
No
No
.
.
.
.
.
.
80,000
400
79,600
40,050
39,550
39,550
Expenses. Enter expenses for business use of your home only on line 30.
8
10
11
.
.
.
Income
Gross receipts or sales. See instructions for line 1 and check the box if this income was reported to you on
Form W-2 and the “Statutory employee” box on that form was checked . . . . . . . . .
Returns and allowances . . . . . . . . . . . . . . . . . . . . . . . . .
Subtract line 2 from line 1 . . . . . . . . . . . . . . . . . . . . . . . .
Cost of goods sold (from line 42) . . . . . . . . . . . . . . . . . . . . . .
Part II
.
.
.
8
9
10
11
3,100
18
19
1,104
20
a
b
12
21
22
23
13
24
14
15
950
16a
.
.
.
.
.
.
.
and (b) the part of your home used for business:
Method Worksheet in the instructions to figure the amount to enter on line 30
.
.
.
.
.
.
.
.
.
.
. Use the Simplified
. . . . . . .
31
Net profit or (loss). Subtract line 30 from line 29.
32
• If a profit, enter on both Schedule 1 (Form 1040), line 3, and on Schedule SE, line 2. (If you
checked the box on line 1, see instructions.) Estates and trusts, enter on Form 1041, line 3.
• If a loss, you must go to line 32.
If you have a loss, check the box that describes your investment in this activity. See instructions.
• If you checked 32a, enter the loss on both Schedule 1 (Form 1040), line 3, and on Schedule
SE, line 2. (If you checked the box on line 1, see the line 31 instructions.) Estates and trusts, enter on
Form 1041, line 3.
• If you checked 32b, you must attach Form 6198. Your loss may be limited.
For Paperwork Reduction Act Notice, see the separate instructions.
.
Cat. No. 11334P
}
}
1,300
7,500
430
600
800
800
50
1,000
3,500
1,425
24,559
14,991
30
31
32a
32b
14,991
All investment is at risk.
Some investment is not
at risk.
Schedule C (Form 1040) 2023
Chapter 6 – Cumulative Software Problem Answer
6-10
Comprehensive Problem 2, cont.
Allison A. Gaytor
Schedule C (Form 1040) 2023
Part III
266-34-1967
Page 2
Cost of Goods Sold (see instructions)
33
Method(s) used to
value closing inventory:
34
Was there any change in determining quantities, costs, or valuations between opening and closing inventory?
If “Yes,” attach explanation . . . . . . . . . . . . . . . . . . . . . . . . .
x Cost
a
b
Lower of cost or market
c
Other (attach explanation)
TREASURY/IRS
AND OMB USE
ONLY DRAFT
July 27, 2023
DO NOT FILE
Yes
.
x No
35
Inventory at beginning of year. If different from last year’s closing inventory, attach explanation .
.
.
35
40,100
36
Purchases less cost of items withdrawn for personal use
.
.
.
.
.
.
.
.
.
.
.
.
.
.
36
37,900
37
Cost of labor. Do not include any amounts paid to yourself .
.
.
.
.
.
.
.
.
.
.
.
.
.
37
38
Materials and supplies
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
38
39
Other costs .
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
39
40
Add lines 35 through 39 .
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
40
78,000
41
Inventory at end of year .
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
41
37,950
42
Cost of goods sold. Subtract line 41 from line 40. Enter the result here and on line 4 .
.
.
.
.
.
42
40,050
Part IV
.
.
.
Information on Your Vehicle. Complete this part only if you are claiming car or truck expenses on line 9 and
are not required to file Form 4562 for this business. See the instructions for line 13 to find out if you must file
Form 4562.
09 / 01
/ 23
43
When did you place your vehicle in service for business purposes? (month/day/year)
44
Of the total number of miles you drove your vehicle during 2023, enter the number of miles you used your vehicle for:
a
Business
1,686
5,000
b Commuting (see instructions)
4,764
c Other
x Yes
46
Do you (or your spouse) have another vehicle available for personal use?. . . . . . . . . . . . . . x Yes
47a Do you have evidence to support your deduction? . . . . . . . . . . . . . . . . . . . . x Yes
b If “Yes,” is the evidence written? . . . . . . . . . . . . . . . . . . . . . . . . . x Yes
45
Was your vehicle available for personal use during off-duty hours?
Part V
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
No
No
No
No
Other Expenses. List below business expenses not included on lines 8–26, line 27b, or line 30.
Business gifts (6 x $25 maximum)
150
Telephone
775
Uniforms
400
Miscellaneous
100
48
Total other expenses. Enter here and on line 27a
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
48
1,425
Schedule C (Form 1040) 2023
Chapter 6 – Cumulative Software Problem Answer
SCHEDULE D
OMB No. 1545-0074
Capital Gains and Losses
(Form 1040)
Department of the Treasury
Internal Revenue Service
6-11
2023
Attach to Form 1040, 1040-SR, or 1040-NR.
Use Form 8949 to list your transactions for lines 1b, 2, 3, 8b, 9, and 10.
Go to www.irs.gov/ScheduleD for instructions and the latest information.
Name(s) shown on return
Attachment
Sequence No. 12
Your social security number
Albert T. and Allison A. Gaytor
Part I
Short-Term Capital Gains and Losses—Generally Assets Held One Year or Less (see instructions)
See instructions for how to figure the amounts to enter on the
lines below.
This form may be easier to complete if you round off cents to
whole dollars.
1a Totals for all short-term transactions reported on Form
1099-B for which basis was reported to the IRS and for
which you have no adjustments (see instructions).
However, if you choose to report all these transactions
on Form 8949, leave this line blank and go to line 1b .
(d)
Proceeds
(sales price)
12,000
(e)
Cost
(or other basis)
(g)
Adjustments
to gain or loss from
Form(s) 8949, Part I,
line 2, column (g)
(h) Gain or (loss)
Subtract column (e)
from column (d) and
combine the result
with column (g)
12,800
1b Totals for all transactions reported on Form(s) 8949 with
Box A checked . . . . . . . . . . . . .
2 Totals for all transactions reported on Form(s) 8949 with
Box B checked . . . . . . . . . . . . .
3 Totals for all transactions reported on Form(s) 8949 with
Box C checked . . . . . . . . . . . . .
4 Short-term gain from Form 6252 and short-term gain or (loss) from Forms 4684, 6781, and 8824 . .
5 Net short-term gain or (loss) from partnerships, S corporations, estates, and trusts from
Schedule(s) K-1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6 Short-term capital loss carryover. Enter the amount, if any, from line 8 of your Capital Loss Carryover
Worksheet in the instructions
. . . . . . . . . . . . . . . . . . . . . . . .
7 Net short-term capital gain or (loss). Combine lines 1a through 6 in column (h). If you have any longterm capital gains or losses, go to Part II below. Otherwise, go to Part III on the back . . . . . .
Part II
266-51-1966
TREASURY/IRS
AND OMB USE
ONLY DRAFT
June 9, 2023
DO NOT FILE
x No
Did you dispose of any investment(s) in a qualified opportunity fund during the tax year?
Yes
If “Yes,” attach Form 8949 and see its instructions for additional requirements for reporting your gain or loss.
(800)
4
5
6
(
7
)
(800)
Long-Term Capital Gains and Losses—Generally Assets Held More Than One Year (see instructions)
See instructions for how to figure the amounts to enter on the
lines below.
This form may be easier to complete if you round off cents to
whole dollars.
(d)
Proceeds
(sales price)
(e)
Cost
(or other basis)
8a Totals for all long-term transactions reported on Form
1099-B for which basis was reported to the IRS and for
which you have no adjustments (see instructions).
However, if you choose to report all these transactions
on Form 8949, leave this line blank and go to line 8b .
67,600
65,615
8b Totals for all transactions reported on Form(s) 8949 with
Box D checked . . . . . . . . . . . . .
9 Totals for all transactions reported on Form(s) 8949 with
Box E checked . . . . . . . . . . . . .
10 Totals for all transactions reported on Form(s) 8949 with
Box F checked . . . . . . . . . . . . . .
775,430
226,700
(g)
Adjustments
to gain or loss from
Form(s) 8949, Part II,
line 2, column (g)
1,985
(543,930)
11 Gain from Form 4797, Part I; long-term gain from Forms 2439 and 6252; and long-term gain or (loss)
from Forms 4684, 6781, and 8824 . . . . . . . . . . . . . . . . . . . . . . .
12 Net long-term gain or (loss) from partnerships, S corporations, estates, and trusts from Schedule(s) K-1
13 Capital gain distributions. See the instructions . . . . . . . . . . . . . . . . . . .
14 Long-term capital loss carryover. Enter the amount, if any, from line 13 of your Capital Loss Carryover
Worksheet in the instructions
. . . . . . . . . . . . . . . . . . . . . . . .
15 Net long-term capital gain or (loss). Combine lines 8a through 14 in column (h). Then, go to Part III
on the back . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
For Paperwork Reduction Act Notice, see your tax return instructions.
Cat. No. 11338H
(h) Gain or (loss)
Subtract column (e)
from column (d) and
combine the result
with column (g)
11
12
13
4,800
665
14 (
15
)
7,450
Schedule D (Form 1040) 2023
Chapter 6 – Cumulative Software Problem Answer
Schedule D (Form 1040) 2023
Part III
16
6-12
Albert T. and Allison A. Gaytor
266-51-1966
Page 2
Summary
Combine lines 7 and 15 and enter the result
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
16
TREASURY/IRS
AND OMB USE
ONLY DRAFT
June 9, 2023
}
DO NOT
FILE
6,650
• If line 16 is a gain, enter the amount from line 16 on Form 1040, 1040-SR, or 1040-NR, line 7.
Then, go to line 17 below.
• If line 16 is a loss, skip lines 17 through 20 below. Then, go to line 21. Also be sure to complete
line 22.
• If line 16 is zero, skip lines 17 through 21 below and enter -0- on Form 1040, 1040-SR, or
1040-NR, line 7. Then, go to line 22.
17
Are lines 15 and 16 both gains?
X Yes. Go to line 18.
No. Skip lines 18 through 21, and go to line 22.
18
If you are required to complete the 28% Rate Gain Worksheet (see instructions), enter the
amount, if any, from line 7 of that worksheet . . . . . . . . . . . . . . . . . .
18
0
If you are required to complete the Unrecaptured Section 1250 Gain Worksheet (see
instructions), enter the amount, if any, from line 18 of that worksheet . . . . . . . . . .
19
0
19
20
Are lines 18 and 19 both zero or blank and you are not filing Form 4952?
X Yes. Complete the Qualified Dividends and Capital Gain Tax Worksheet in the instructions
for Form 1040, line 16. Don’t complete lines 21 and 22 below.
No. Complete the Schedule D Tax Worksheet in the instructions. Don’t complete lines 21
and 22 below.
21
If line 16 is a loss, enter here and on Form 1040, 1040-SR, or 1040-NR, line 7, the smaller of:
• The loss on line 16; or
• ($3,000), or if married filing separately, ($1,500)
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
21 (
)
Note: When figuring which amount is smaller, treat both amounts as positive numbers.
22
Do you have qualified dividends on Form 1040, 1040-SR, or 1040-NR, line 3a?
Yes. Complete the Qualified Dividends and Capital Gain Tax Worksheet in the instructions
for Form 1040, line 16.
No. Complete the rest of Form 1040, 1040-SR, or 1040-NR.
Schedule D (Form 1040) 2023
Chapter 6– Cumulative Software Problem Answer
Form
8949
Department of the Treasury
Internal Revenue Service
6-13
Sales and Other Dispositions of Capital Assets
File with your Schedule D to list your transactions for lines 1b, 2, 3, 8b, 9, and 10 of Schedule D.
Go to www.irs.gov/Form8949 for instructions and the latest information.
Name(s) shown on return
OMB No. 1545-0074
2023
Attachment
Sequence No. 12A
Social security number or taxpayer identification number
Albert T. and Allison A. Gaytor
266-51-1966
TREASURY/IRS
AND OMB USE
ONLY DRAFT
June 30, 2023
DO NOT FILE
Before you check Box A, B, or C below, see whether you received any Form(s) 1099-B or substitute statement(s) from your broker. A substitute
statement will have the same information as Form 1099-B. Either will show whether your basis (usually your cost) was reported to the IRS by your
broker and may even tell you which box to check.
Part I
Short-Term. Transactions involving capital assets you held 1 year or less are generally short-term (see
instructions). For long-term transactions, see page 2.
Note: You may aggregate all short-term transactions reported on Form(s) 1099-B showing basis was
reported to the IRS and for which no adjustments or codes are required. Enter the totals directly on
Schedule D, line 1a; you aren’t required to report these transactions on Form 8949 (see instructions).
You must check Box A, B, or C below. Check only one box. If more than one box applies for your short-term transactions,
complete a separate Form 8949, page 1, for each applicable box. If you have more short-term transactions than will fit on this page
for one or more of the boxes, complete as many forms with the same box checked as you need.
(A) Short-term transactions reported on Form(s) 1099-B showing basis was reported to the IRS (see Note above)
(B) Short-term transactions reported on Form(s) 1099-B showing basis wasn’t reported to the IRS
(C) Short-term transactions not reported to you on Form 1099-B
1
(a)
Description of property
(Example: 100 sh. XYZ Co.)
(b)
Date acquired
(Mo., day, yr.)
(c)
Date sold or
disposed of
(Mo., day, yr.)
(d)
Proceeds
(sales price)
(see instructions)
Adjustment, if any, to gain or loss
If you enter an amount in column (g),
(e)
(h)
enter a code in column (f).
Cost or other basis
Gain or (loss)
See the Note below See the separate instructions.
Subtract column (e)
and see Column (e)
from column (d) and
(f)
(g)
in the separate
combine the result
Code(s) from
instructions.
with column (g).
Amount of
instructions
adjustment
2 Totals. Add the amounts in columns (d), (e), (g), and (h) (subtract
negative amounts). Enter each total here and include on your
Schedule D, line 1b (if Box A above is checked), line 2 (if Box B
above is checked), or line 3 (if Box C above is checked) . .
Note: If you checked Box A above but the basis reported to the IRS was incorrect, enter in column (e) the basis as reported to the IRS, and enter an
adjustment in column (g) to correct the basis. See Column (g) in the separate instructions for how to figure the amount of the adjustment.
For Paperwork Reduction Act Notice, see your tax return instructions.
Cat. No. 37768Z
Form 8949 (2023)
Chapter 6– Cumulative Software Problem Answer
6-14
Attachment Sequence No. 12A
Form 8949 (2023)
Name(s) shown on return. Name and SSN or taxpayer identification no. not required if shown on other side
Page 2
Social security number or taxpayer identification number
Albert T. and Allison A. Gaytor
266-51-1966
Before you check Box D, E, or F below, see whether you received any Form(s) 1099-B or substitute statement(s) from your broker. A substitute
statement will have the same information as Form 1099-B. Either will show whether your basis (usually your cost) was reported to the IRS by your
broker and may even tell you which box to check.
Part II
TREASURY/IRS
AND OMB USE
ONLY DRAFT
June 30, 2023
DO NOT FILE
Long-Term. Transactions involving capital assets you held more than 1 year are generally long-term (see
instructions). For short-term transactions, see page 1.
Note: You may aggregate all long-term transactions reported on Form(s) 1099-B showing basis was reported
to the IRS and for which no adjustments or codes are required. Enter the totals directly on Schedule D, line
8a; you aren’t required to report these transactions on Form 8949 (see instructions).
You must check Box D, E, or F below. Check only one box. If more than one box applies for your long-term transactions, complete
a separate Form 8949, page 2, for each applicable box. If you have more long-term transactions than will fit on this page for one or
more of the boxes, complete as many forms with the same box checked as you need.
(D) Long-term transactions reported on Form(s) 1099-B showing basis was reported to the IRS (see Note above)
(E) Long-term transactions reported on Form(s) 1099-B showing basis wasn’t reported to the IRS
X (F) Long-term transactions not reported to you on Form 1099-B
1
(a)
Description of property
(Example: 100 sh. XYZ Co.)
(b)
Date acquired
(Mo., day, yr.)
(c)
Date sold or
disposed of
(Mo., day, yr.)
(d)
Proceeds
(sales price)
(see instructions)
Adjustment, if any, to gain or loss
If you enter an amount in column (g),
(e)
(h)
enter a code in column (f).
Cost or other basis
Gain or (loss)
See the Note below See the separate instructions.
Subtract column (e)
and see Column (e)
from column (d) and
(f)
(g)
in the separate
combine the result
Code(s) from
instructions.
with column (g).
Amount of
instructions
adjustment
Primary residence
01/31/10 01/12/23
770,430
201,700
Behemoth Air
06/16/17 12/31/23
2,500
12,500
Behemoth Air (non-deduct
Section 267)
06/16/17 12/31/23
2,500
12,500
775,430
226,700
EH
(553,930)
L
14,800
(10,000)
10,000
0
(543,930)
4,800
2 Totals. Add the amounts in columns (d), (e), (g), and (h) (subtract
negative amounts). Enter each total here and include on your
Schedule D, line 8b (if Box D above is checked), line 9 (if Box E
above is checked), or line 10 (if Box F above is checked) . .
Note: If you checked Box D above but the basis reported to the IRS was incorrect, enter in column (e) the basis as reported to the IRS, and enter an
adjustment in column (g) to correct the basis. See Column (g) in the separate instructions for how to figure the amount of the adjustment.
Form 8949 (2023)
(a) Uncle is not considered a related party for Section 267 purposes. Loss is allowed.
(a)
Chapter 6– Cumulative Software Problem Answer
SCHEDULE E
(Form 1040)
6-15
Supplemental Income and Loss
OMB No. 1545-0074
Attach to Form 1040, 1040-SR, 1040-NR, or 1041.
Go to www.irs.gov/ScheduleE for instructions and the latest information.
Department of the Treasury
Internal Revenue Service
Name(s) shown on return
Attachment
Sequence No. 13
Your social security number
Albert T. and Allison A. Gaytor
Part I
2023
(From rental real estate, royalties, partnerships, S corporations, estates, trusts, REMICs, etc.)
266-51-1966
Income or Loss From Rental Real Estate and Royalties
TREASURY/IRS
AND OMB USE
ONLY DRAFT
July 28, 2023
DO NOT FILE
Note: If you are in the business of renting personal property, use Schedule C. See instructions. If you are an individual, report farm
rental income or loss from Form 4835 on page 2, line 40.
A
B
Did you make any payments in 2023 that would require you to file Form(s) 1099? See instructions .
If “Yes,” did you or will you file required Form(s) 1099? . . . . . . . . . . . . . .
1a
Physical address of each property (street, city, state, ZIP code)
A
B
C
1b
1237 Pineapple Street, Lihue, HI 96766
Type of Property
(from list below)
2
A
1
B
C
Type of Property:
1 Single Family Residence
2 Multi-Family Residence
For each rental real estate property listed
above, report the number of fair rental and
personal use days. Check the QJV box only
if you meet the requirements to file as a
qualified joint venture. See instructions.
3 Vacation/Short-Term Rental
4 Commercial
.
.
.
.
.
.
Personal Use
Days
365
0
x No
No
QJV
7 Self-Rental
8 Other (describe)
Properties:
Income:
A
B
3
Rents received . . . . . . . . . . . . . .
3
21,000
4
Royalties received . . . . . . . . . . . . .
4
Expenses:
5
5
Advertising . . . . . . . . . . . . . . .
6
Auto and travel (see instructions) . . . . . . .
6
7
Cleaning and maintenance . . . . . . . . . .
7
2,600
8
Commissions . . . . . . . . . . . . . .
8
9
Insurance . . . . . . . . . . . . . . . .
9
10
Legal and other professional fees . . . . . . .
10
11
Management fees . . . . . . . . . . . . .
11
12
Mortgage interest paid to banks, etc. (see instructions)
12
8,100
13
Other interest . . . . . . . . . . . . . .
13
14
Repairs . . . . . . . . . . . . . . . . .
14
600
15
Supplies . . . . . . . . . . . . . . . .
15
16
Taxes . . . . . . . . . . . . . . . . .
16
2,200
17
Utilities . . . . . . . . . . . . . . . . .
17
1,500
18
Depreciation expense or depletion . . . . . . .
18
19
19
Other (list)
20
Total expenses. Add lines 5 through 19 . . . . .
20
15,000
21
Subtract line 20 from line 3 (rents) and/or 4 (royalties). If
result is a (loss), see instructions to find out if you must
file Form 6198 . . . . . . . . . . . . . .
6,000
21
22
Deductible rental real estate loss after limitation, if any,
on Form 8582 (see instructions) . . . . . . . .
)(
)(
22 (
23a Total of all amounts reported on line 3 for all rental properties
. . . .
23a
21,000
b Total of all amounts reported on line 4 for all royalty properties . . . .
23b
c Total of all amounts reported on line 12 for all properties . . . . . .
23c
8,100
d Total of all amounts reported on line 18 for all properties . . . . . .
23d
e Total of all amounts reported on line 20 for all properties . . . . . .
23e
15,000
24
Income. Add positive amounts shown on line 21. Do not include any losses
. . . . . . .
24
25
Losses. Add royalty losses from line 21 and rental real estate losses from line 22. Enter total losses here
25 (
26
Total rental real estate and royalty income or (loss). Combine lines 24 and 25. Enter the result
here. If Parts II, III, and IV, and line 40 on page 2 do not apply to you, also enter this amount on
Schedule 1 (Form 1040), line 5. Otherwise, include this amount in the total on line 41 on page 2 .
26
For Paperwork Reduction Act Notice, see the separate instructions.
Yes
Yes
Fair Rental
Days
A
B
C
5 Land
6 Royalties
.
.
Cat. No. 11344L
C
)
6,000
)
6,000
Schedule E (Form 1040) 2023
Chapter 6– Cumulative Software Problem Answer
SCHEDULE SE
2023
Attach to Form 1040, 1040-SR, 1040-SS, or 1040-NR.
Attachment
Sequence No. 17
Go to www.irs.gov/ScheduleSE for instructions and the latest information.
Name of person with self-employment income (as shown on Form 1040, 1040-SR, 1040-SS, or 1040-NR)
Allison A. Gaytor
Part I
OMB No. 1545-0074
Self-Employment Tax
(Form 1040)
Department of the Treasury
Internal Revenue Service
6-16
Social security number of person
with self-employment income
266-34-1967
Self-Employment Tax
TREASURY/IRS
AND OMB USE
ONLY DRAFT
July 10, 2023
DO NOT FILE
Note: If your only income subject to self-employment tax is church employee income, see instructions for how to report your income
and the definition of church employee income.
A
If you are a minister, member of a religious order, or Christian Science practitioner and you filed Form 4361, but you had
$400 or more of other net earnings from self-employment, check here and continue with Part I . . . . . . . . .
Skip lines 1a and 1b if you use the farm optional method in Part II. See instructions.
1a Net farm profit or (loss) from Schedule F, line 34, and farm partnerships, Schedule K-1 (Form 1065),
1a
box 14, code A . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b If you received social security retirement or disability benefits, enter the amount of Conservation Reserve
)
Program payments included on Schedule F, line 4b, or listed on Schedule K-1 (Form 1065), box 20, code AH 1b (
Skip line 2 if you use the nonfarm optional method in Part II. See instructions.
Net profit or (loss) from Schedule C, line 31; and Schedule K-1 (Form 1065), box 14, code A (other than
2
2
farming). See instructions for other income to report or if you are a minister or member of a religious order
14,991
3
Combine lines 1a, 1b, and 2 . . . . . . . . . . . . . . . . . . . . . . . . .
3
14,991
4a If line 3 is more than zero, multiply line 3 by 92.35% (0.9235). Otherwise, enter amount from line 3 .
4a
13,844
Note: If line 4a is less than $400 due to Conservation Reserve Program payments on line 1b, see instructions.
b If you elect one or both of the optional methods, enter the total of lines 15 and 17 here . . . . .
4b
c Combine lines 4a and 4b. If less than $400, stop; you don’t owe self-employment tax. Exception: If
less than $400 and you had church employee income, enter -0- and continue . . . . . . . .
4c
13,844
5a Enter your church employee income from Form W-2. See instructions for
definition of church employee income . . . . . . . . . . . . .
5a
b Multiply line 5a by 92.35% (0.9235). If less than $100, enter -0- . . . . . . . . . . . . .
5b
6
Add lines 4c and 5b . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
13,844
7
Maximum amount of combined wages and self-employment earnings subject to social security tax or
160,200
the 6.2% portion of the 7.65% railroad retirement (tier 1) tax for 2023 . . . . . . . . . . .
7
8a
Total social security wages and tips (total of boxes 3 and 7 on Form(s) W-2)
and railroad retirement (tier 1) compensation. If $160,200 or more, skip lines
8b through 10, and go to line 11 . . . . . . . . . . . . . . .
8a
b Unreported tips subject to social security tax from Form 4137, line 10 . . .
8b
c Wages subject to social security tax from Form 8919, line 10 . . . . . .
8c
d Add lines 8a, 8b, and 8c . . . . . . . . . . . . . . . . . . . . . . . . . .
9
Subtract line 8d from line 7. If zero or less, enter -0- here and on line 10 and go to line 11 . . . .
10
Multiply the smaller of line 6 or line 9 by 12.4% (0.124) . . . . . . . . . . . . . . . .
11
Multiply line 6 by 2.9% (0.029) . . . . . . . . . . . . . . . . . . . . . . . .
12
Self-employment tax. Add lines 10 and 11. Enter here and on Schedule 2 (Form 1040), line 4, or
Form 1040-SS, Part I, line 3 . . . . . . . . . . . . . . . . . . . . . . . .
13
Deduction for one-half of self-employment tax.
Multiply line 12 by 50% (0.50). Enter here and on Schedule 1 (Form 1040),
1,059
line 15 . . . . . . . . . . . . . . . . . . . . . . . .
13
For Paperwork Reduction Act Notice, see your tax return instructions.
Cat. No. 11358Z
8d
9
10
11
0
160,200
1,717
401
12
2,118
Schedule SE (Form 1040) 2023
Chapter 6– Cumulative Software Problem Answer
Form
8995
Department of the Treasury
Internal Revenue Service
6-17
Qualified Business Income Deduction
Simplified Computation
OMB No. 1545-2294
2023
Attach to your tax return.
Go to www.irs.gov/Form8995 for instructions and the latest information.
Attachment
Sequence No. 55
Your taxpayer identification number
Name(s) shown on return
Albert T. and Allison A. Gaytor
266-51-1966
TREASURY/IRS
AND OMB USE
ONLY DRAFT
October 3, 2023
DO NOT FILE
Note. You can claim the qualified business income deduction only if you have qualified business income from a qualified trade or
business, real estate investment trust dividends, publicly traded partnership income, or a domestic production activities deduction
passed through from an agricultural or horticultural cooperative. See instructions.
Use this form if your taxable income, before your qualified business income deduction, is at or below $182,100 ($364,200 if married
filing jointly), and you aren’t a patron of an agricultural or horticultural cooperative.
1
i
ii
iii
iv
v
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
(a) Trade, business, or aggregation name
(b) Taxpayer
identification number
Toge Pass
(c) Qualified business
income or (loss)
98-7321654
Total qualified business income or (loss). Combine lines 1i through 1v,
column (c)
. . . . . . . . . . . . . . . . . . . . . .
2
13,932
Qualified business net (loss) carryforward from the prior year . . . . . . .
3 (
)
Total qualified business income. Combine lines 2 and 3. If zero or less, enter -04
13,932
Qualified business income component. Multiply line 4 by 20% (0.20) . . . . . . . . . . .
5
Qualified REIT dividends and publicly traded partnership (PTP) income or (loss)
6
(see instructions) . . . . . . . . . . . . . . . . . . . .
Qualified REIT dividends and qualified PTP (loss) carryforward from the prior
)
year . . . . . . . . . . . . . . . . . . . . . . . . .
7 (
Total qualified REIT dividends and PTP income. Combine lines 6 and 7. If zero
or less, enter -0- . . . . . . . . . . . . . . . . . . . .
8
REIT and PTP component. Multiply line 8 by 20% (0.20) . . . . . . . . . . . . . . .
9
Qualified business income deduction before the income limitation. Add lines 5 and 9 . . . . . .
10
Taxable income before qualified business income deduction (see instructions)
11
51,807 (b)
Net capital gain (see instructions) . . . . . . . . . . . . . . .
12
8,050 (c)
Subtract line 12 from line 11. If zero or less, enter -0- . . . . . . . .
13
43,757
Income limitation. Multiply line 13 by 20% (0.20) . . . . . . . . . . . . . . . . . .
14
Qualified business income deduction. Enter the smaller of line 10 or line 14. Also enter this amount on
the applicable line of your return (see instructions) . . . . . . . . . . . . . . . . .
15
Total qualified business (loss) carryforward. Combine lines 2 and 3. If greater than zero, enter -0- . .
16 (
Total qualified REIT dividends and PTP (loss) carryforward. Combine lines 6 and 7. If greater than
zero, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17 (
For Privacy Act and Paperwork Reduction Act Notice, see instructions.
Cat. No. 37806C
(a) $14,991 (Sch. C) less $1,059 (Sch. SE). Both are found on Schedule 1.
(b) $80,803 (AGI) less $28,996 (itemized deductions)
(c) $1,400 (qualified dividends) + $6,650 (net LT capital gains)
13,932
(a)
2,786
2,786
8,751
2,786
0 )
)
Form 8995 (2023)
Chapter 6 – Cumulative Software Problem Answer
Albert Problem
T. and Allison
A. Gaytor
Comprehensive
2, cont.
6-18
266-51-1966
49,021
1,400
X
6,650
8,050
40,971
44,625
89,250
59,750
89,250
492,300
276,900
553,850
523,050
553,850
49,021
40,971
8,050
8,050
8,050
0
49,021
49,021
0
0
0
8,050
0
0
4,477
4,477
5,443
4,477
This worksheet adapted from the 2022 worksheet.
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