Roberta Santos, age 41, is single and lives at 120 San-borne Avenue, Springfield, IL 60781. Her Social

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Roberta Santos, age 41, is single and lives at 120 San-borne 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 111-11-1111, 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 of $75,000 in 2012. Her employer withheld $8,500 in Federal income tax, $3,100 in state income tax, and the appropriate amount of FICA tax: $3,150 for Social Security tax and $1,087.50 for Medicare 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 $10,500. Roberta can document that she spent $6,500 for Jason's support during 2012. In prior years, Roberta gave a signed Form 8332 to Wayne regarding Jason. For 2012, she has decided not to do so. Roberta provides all of June's support.

Roberta's mother died on January 7, 2012. 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, 2012, Roberta sells for $20,000 Amber stock that she had purchased for $24,000 from her first cousin, Walt, on December 5, 2007. Walt's cost basis for the stock was $26,000, and the stock was worth $23,000 on December 5, 2007. On December 1, 2012, Roberta sold Falcon stock for $13,500. She had acquired the stock on July 2, 2009, for $7,000.

Roberta's mother died on January 7, 2012. 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, 2012, Roberta sells for $20,000 Amber stock that she had purchased for $24,000 from her first cousin, Walt, on December 5, 2007. Walt's cost basis for the stock was $26,000, and the stock was worth $23,000 on December 5, 2007. On December 1, 2012, Roberta sold Falcon stock for $13,500. She had acquired the stock on July 2, 2009, for $7,000.

An examination of Roberta's records reveals that she received the following:

• Interest income of $2,000 from First Savings Bank.

• Groceries valued at $750 from a local grocery store 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 $15,000 from Wayne.

Distribution of $4,800 from ST Partnership. Her distributive share of the partnership passive taxable income was $5,300.

From her checkbook records, she determines that she made the following payments during 2012:

• Charitable contributions of $3,500 to First Presbyterian Church and $1,500 to the

American Red Cross (proper receipts obtained).

• Mortgage interest on her residence of $7,800.

• Property taxes of $3,100 on her residence and $1,100 on her car.

• Estimated Federal income taxes of $3,800 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 2012. If you use tax forms, you will need Form 1040 and Schedules A, B, D, and E. Suggested software: H&R BLOCK At Home?

Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...
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Related Book For  answer-question

South Western Federal Taxation 2014 Comprehensive Volume

ISBN: 9781285180922

37th Edition

Authors: William H. Hoffman, David M. Maloney, William A. Raabe, James C. Young

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