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Comprehensive Problem 07-63 (LO 07-1, LO 07-2, LO 07-3, LO 07-4)
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During 2021, your clients, Mr. and Mrs. Howell, owned the
following investment assets:
*No commissions are charged when no-load mutual funds are bought
and sold.
Because of the downturn in the stock market, Mr. and Mrs. Howell
decided to sell most of their stocks and the mutual fund in 2021
and to reinvest in municipal bonds. The following investment assets
were sold in 2021:
*No commissions are charged when no-load mutual funds are bought
and sold.
The Howells’ broker issued them a Form 1099-B showing the sales
proceeds net of the commissions paid. For example, the IBM sales
proceeds were reported as $13,700 on the Form 1099-B they
received.
In addition to the sales reflected in the table above, the
Howells provided you with the following additional information
concerning 2021:
Comprehensive Problem 07-63 Part a (Algo)
a. Use Form 8949 and page 1 of Schedule D
to compute net long-term and short-term capital gains. Then,
compute the Howells’ tax liability for the year (ignoring the
alternative minimum tax and any phase-out provisions) assuming they
file a joint return, they have no dependents, they don’t make any
special tax elections, and their itemized deductions total $26,000.
Assume that asset bases are reported to the IRS. (Use the tax
rate schedules, Dividends and Capital Gains Tax Rates.)
What is the amount of cost of other basis (e) on form 8949. Also
it is showing there is another short term transaction
missing.
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 Adjustment, if any, to gain or loss. If you enter an amount in column (g), enter a code in column (f). See the separate instructions. (b) Date acquired (Mo., day, yr.) (c) Date sold or disposed of (Mo., day, yr.) (a) Description of property (Example: 100 sh. XYZ Co.) 451 sh Vanguard mutual fund (d) Proceeds (sales price) (see instructions) (e) Cost or other basis. See the Note below and see Column (e) in the separate instructions 14,800 (h) Gain or (loss). Subtract column (e) from column (d) and combine the result with column (g) (f) Code(s) from instructions (g) Amount of adjustment various 12/21/2021 various 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 15,800 14,800 1,000 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 (2020) THIS FORM IS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF. DO NOT USE THIS FORM FOR TAX FILINGS OR FOR ANY PURPOSE OTHER THAN EDUCATIONAL. Ⓒ2021 McGraw-Hill Education. 15,800 1,000 X
Capital Gains and Losses OMB No. 1545-0074 SCHEDULE D (Form 1040) Attach to Form 1040, 1040-SR, or 1040-NR. 2020 Department of the Treasury Internal Revenue Service (99) Go to www.irs.gov/Scheduled for instructions and the latest information. ►Use Form 8949 to list your transactions for lines 1b, 2, 3, 8b, 9, and 10. Name(s) shown on return Attachment Sequence No. 12 Your social security number 412-34-5670 Mr. and Mrs. Howell Did you dispose of any investment(s) in a qualified opportunity fund during the tax year? Yes No If "Yes," attach Form 8949 and see its instructions for additional requirements for reporting your gain or loss. 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. (d) Proceeds (sales price) (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 (9) 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 1b Totals for all transactions reported on Form(s) 8949 with Box A checked 1,000 15,800 0 14,800 0 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 0 0 4 Short-term gain from Form 6252 and short-term gain or (loss) from Forms 4684, 6781, and 8824 4 0 5 Net short-term gain or (loss) from partnerships, S corporations, estates, and trusts from Schedule(s) K-1 5 0 6 Short-term capital loss carryover. Enter the amount, if any, from line 8 of your Capital Loss Carryover Worksheet in the 6 1,400 instructions 7 Net short-term capital gain or (loss). Combine lines 1a through 6 in column (h). If you have any long-term capital gains or losses, go to Part II below. Otherwise, go to Part III on the back 7 2,400 Part II 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. (d) Proceeds (sales price) (e) Cost (or other basis) (g) Adjustments to gain or loss from Form(s) 8949, Part II,line 2, column (g) (h) Gain or (loss) Subtract column (e) from column (d) and combine the result with column (g) This form may be easier to complete if you round off cents to whole dollars. 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 8b Totals for all transactions reported on Form(s) 8949 with 212,910 82,900 Roy D cherkar 295,810
Howells' tax liability for the year 142,700 <Form 8949 PG1