Comprehensive Problem 4-2A

Dr. George E. Beeper is a single taxpayer born on September 22, 1972. He lives at 45 Mountain View Dr., Apt. 321, Spokane, WA 99210. Dr. Beeper's Social Security number is 775-88-9531. Dr. Beeper works for the Pine Medical Group, and his earnings and income tax withholding for 2020 are reported on the W-2 form (see separate tab).

Dr. Beeper owns a rental house located at 672 Lake Street, Spokane, WA 99212. The house rents for $1,000 per month and was rented for the entire year. The following are the related expenses for the rental house:

Real estate taxes $6,000

Mortgage interest 14,500

Insurance 2,200

Depreciation (assume fully depreciated) 0

Repairs 600

Maintenance 2,000

The house was purchased on July 5, 1985. Dr. Beeper handles all rental activities (e.g., rent collection, finding tenants, etc.) himself. He spends about 10 hours per month on the rental.

In 2020, Dr. Beeper sold his primary residence as he wished to move to an apartment to avoid the maintenance and upkeep of a single-family home. Dr. Beeper's home sold on February 12, 2020 for $345,000 net after commissions. He acquired the home on June 3, 2002 for $260,000 and had made improvements of $10,000.

Dr. Beeper was divorced on January 1, 2014. The divorce decree requires Dr. Beeper to pay his ex-wife, Meredith Gray (Social Security number 333-45-1234), $800 per month. Dr. Beeper made all his monthly alimony payments in 2020.

Dr. Beeper did not receive an EIP in 2020.

Required:

Complete Form 1040 and the schedules and forms provided for Dr. Beeper.

• The taxpayer had health coverage for the entire year.
• The taxpayer does not want to make a contribution to the presidential election campaign.
• Do not complete Form 4562 for reporting depreciation.
• Make realistic assumptions about any missing data.
• If an amount box does not require an entry or the answer is zero, enter "0".
• If required, round any amount to the nearest dollar.
• Enter all amounts as positive numbers except for the following special instructions: If required, on Form 1040, line 7a and on Schedule E, on lines 21, 25, and 26, use the minus sign to indicate a loss.
• On Form 8582, if required, use the minus sign to enter a "loss" as a negative number on the lines 1d, 4, 16. However, per the instructions on the tax return, enter all numbers in Part II as positive amounts.

\fForrn Department of the Treasuryilnlernal Revenue Service (99) 140 U.S. Individual Income Tax Return 2020 OMB No 1545-0074 IRS Use Only Filing Status Single Your first name and middle initial Last name Your social security number George E. Beeper 77578879531 If joint return, spouse's first name and middle initial Last name Spouse's social security number Home address (number and street). If you have a P.O. box, see instructions. Apt. no. Presidential Election Campaign 45 Mountain View Drive 321 Check here if you, or your spouse if City. town, or post office. If you have a foreign address. also complete State ZIP code lingjointly, want $3 to go to Fh's spaces below. WA 99210 fund. Checking a box below Will not Spokane change yourtax or refund None Foreign country name Foreign province/state/'country Foreign postal code At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any nancial interest in any virtual currency? ND Stands rd _ _ Someone can claim: None Deduction _ You: None Age/Blindness Spouse: None Dependents (see instructions): (2) Social security (3) Relationship (4) J if qualifies for (see instructions): If more than four (1) First name Last name number to YOU Child tax credit Credit for other dependents dependents, see D D instructions and check here b D D D oi oi oi ci 1 wages, salaries, tips. etc. Attach Form(s) WVZ .............................. 1. Attach la Tax-exempt interest. . 23 b Taxable interest ..... . . . . 2b Sch. E if required. 33 Qualied dividends . . 33 b Ordinary dividends ....... 3b 4a IRA distributions ..... 4a b Taxable amount ......... 4h 53 Pensions and annuities 53 d Taxable amount .......... 5h Standard 6a Social security benets 63 b Taxable amount .......... 6b Deduction for 7 Ca ital ain or loss . Attach Schedule D if re uired. If not re uired, check here . . D D 7 . Single 0, P 9 I ) q q :l Married filing 8 Other income from Schedule 1, line 9 .................................... s E separately, $12,400 9 Add lines 1, 2b. 3b. 4b, 5b. 6b. 7. and B. This is yourtotal income ............. b 9 S - Married filing _ _ . 10 Adjustments to income: Jointly or Qualifying a From Schedule 1, line 22 .......................... 103 widow[er), $24,500 b Charitable contributions ifyou take the standard deduction. - Head of See instructions ......... . . ..... . . . . ........ 10b household, . . $18 650 c Add lines 10a and 10b. These are your total adjustments to Income ........... b 10c ' If you ChECkEd 11 Subtract line 10: from line 9. This is your adjusted gross income . .......... . D 11 C any box under Standard 12 Standard deduction or itemized deductions (from Schedule A) ................ 12 Deduction, see 7 instructions. 13 Qualied business income deduction. Attach Form 8995 or Form 8995A ............ l3 14 Add lines 12 and 13 ................................................. 14 E 15 Taxable income. Subtract line 14 from line 11. If zero or less, enter -0- ...... . . . . 15 S For Disclosure. Privacy Act. and Paperwork Reduction Act Notice, see separate instructions. Cat. No. 113203 Form 1.040 (2020} Form man (2020) George E. Beeper 77538-9531 Page 2 16 Tax [see instructions). Check if any from Fonn(5): 1 El 8814 2 El 4972 3 D 7 . . 16 [:l 17 Amount from Schedule 2, line 3 ........................................ 17 18 Add lines 16 and 17 ................................................ 13 I: 19 Child tax credit or credit for other dependents .............................. 19 20 Amount from Schedule 3, line 7 ........................................ 20 21 Add lines 19 and 20 ................................................. 21 22 Subtract line 21 from line 18. If zero or less, enter -0- ......................... 22 I: 23 Other taxes, including selfeemployment tax, from Schedule 2, line It) .............. 23 24 Add lines 22 and 23. This is your total lax ............................... b I: 25 Federal income tax withheld from: ...................................... Form( 5) W72 .................................. - a E liiiiil - 25a b Form(s) 1099 ................................. 25b c other forms (see instructions) ...................... 15c d Add lines 25a through 25: .............. - If you have a qualifying child, 26 2020 estimated tax payments and amount applied from 2|]19 return . ............. attach Sch. EIC. 27 Earned income credit (EIC) ........................ - If you have 27 nontaxable Additional child tax credit. Attach Schedule 8812 ......... combat pay, see 28 instructions. 29 American opportunity credit from Form 8853, line 8 ...... 29 Recovery rebate credit. See instructions ............... 3|] 31 Amount from Schedule 3, line 13 .................... 31 32 Add lines 27 through 31. These are your total other payments and refundable credits ........................ D 32 33 Add lines 25d, 26, and 32. These are your total payments ................... b 33 34 Ifline 33 is more than line 24, subtract line 24 from line 33. This is the amount on Refu nd V Direct deposit? See instructions. overpaid ........................................................ 34 [:l 353 Amount of line 34 you want refunded to you. If Form 8888 is attached, check here > El 35a [:1 D b Routing number b cType: El Cheddng i:i Savings b d Account number 36 Amount of line 34 you want applied to your 2021 estimated tax ....................................... D 36 37 Subtract line 33 from line 24. This is the amount you owe now ............... b Note: Schedule H and Schedule SE lers, line 37 may not represent all of the taxes you owe for 2020. See Schedule 3, line 12e, and its instructions for details. 38 Estimated tax penalty (see instructions) .............. b ' 31! ' Amount You Owe For details on how to pay, see instructions. _ . . . 7 . . Thll'd Party Do you want to allow another person to discuss this return with the IRS lSee instnictions. b D V5. Complete below. D No DESIQ nee Designee's Phone Personal identication name > no. r number (PIN) > Sign 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 Here taxpayer) is based on all information of which preparer has any knowledge. Joint return? See instructions. Keep a copy for Your signature Date Your occupation 1f the IRS sent you an Identity Protection PIN. enter it here Physician (see inst.) b Spouse's signature. If a joint Date Spouse's occupation If the IRS sent YDUT spouse an SCHEDULE 1 OMB No. 1545-0074 (For... 104") Additional Income and Adjustments to Income 2020 Department of the Treasury 5 Attach to Form 104a, lowSit, or lowNR. Attachment Internal Revenue SerVice D Go to www.irs.gov/Form1040 for instructions and the latest information. sequence \"0- \"1 Name(s) shown on Form 1040, IMO-SR, or 1040-NR Your social security number George E. Deeper 775-823-9531 Additional Income 1 Taxable refunds, credits, or offsets of state and local income taxes ............................... 1 23 Alimony received ................................................................. 23 I) Date of original divorce or separation agreement (see instructions} b - 3 Business income or (loss). Attach Schedule C .............................................. 3 4 Other gains or (losses). Attach Form 4797 ................................................ 4 5 Rental real estate, royalties, partnerships, S corporationsr trusts, etc. Attach Schedule E ................ 5 I:] 6 Farm income or (loss). Attach Schedule F ................................................ 6 1 Unemployment compensation ........................................................ 7 B other income. List type and amount D 8 9 Combine lines 1 through 8. Enter here and on Form 1040. 104075R, or lotiueNR. line 8 ................ 9 I:] Part [I Adjustments to Income 10 Educator expenses ................................................................. 10 11 Certain business expenses of reservists, performing artists, and feeebasis government ofcials. Attach Form 2106 .......................................................................... ll 12 , Health saVIngs account deduction. Attach Form 8589 ......................................... 11 13 Movmg expenses for members of the Armed Forces. Attach Form 3903 ............................ 13 14 Deductible part of self-employment tax. Attach Schedule SE .................................... 14 15 Self-employed SEP, SIMPLE, and qualied plans ............................................. 15 16 , , Selfiemployed health insurance deduction ................................................. 16 17 Penalty on early withdrawal of savings .................................................... 17 18a Alimony paid ..................................................................... la lJ Recipient's SSN ............................................ b 333 45 1134 c Date of original divorce or separation agreement (see instructions) b 01/01/2014 19 IRA deduction ..................................................................... 19 20 Student loan interest deduction ........................................................ 20 21 _ _ _ Tuition and fees deduction. Attach Form 8917 .............................................. 21 22 Add lines 10 through 21. These are your adjustments to income. Enter here and on Form 1040 or 104DeSR, or 10407NR, line 10a ................................................................ 21 For Paperwork Reduction Act Notice. see your tax return instructions. Cat. No. 71479F Schedule 1 (Form 1040) 2010 SCHEDULE E Supplemental Income and Loss OMB No. 1545-0074 (Form 1040) ( From rental real estate, royalties, partnerships, 5 corporations, estates, 2020 trusts, REMICs, etc.) Department of the Treasury Attach to Form 1040, 1040-5R, 1040-NR, or 1041. Attachment Internal Revenue Service (99) Go to www.irs.gov/ScheduleE for instructions and the latest information. Sequence No. 13 Name(s) shown on return Your social security number George E. Beeper 775-88-9531 Part I Income or Loss From Rental Real Estate and Royalties 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 Did you make any payments in 2020 that would require you to file Form(s) 1099? (see instructions) Yes No If "Yes," did you or will you file required Forms 1099? Yes O No 1a Physical address of each property (street, city, state, ZIP code) A 672 Lake Street, Spokane, WA 99212 B 1b Type of Property For each rental real estate property Fair Rental Personal Use (from list below) QJV listed above, report the number of fair Days Days A rental and personal use days. Check the A 365 0 QJV box only if you meet the B requirements to file as a qualified joint B venture. See instructions. C Type of Property: 1 Single Family Residence 3 Vacation/Short-Term Rental 5 Land 7 Self-Rental 2 Multi-Family Residence 4 Commercial 6 Royalties 8 Other (describe) Income: Properties: A B C Rents received . . . . . . 3 12,000 Royalties received . . . . . . 4 Expenses Advertising . . . . . 5 Auto and travel (see instructions) . . . . 6 7 Cleaning and maintenance . . . 2,000 Commissions . . 9 Insurance . . g 2,200 10 Legal and other professional fees . . . . 10 Management fees , . 11 12 Mortgage interest paid to banks, etc. (see instructions) 12 14,500 13 Other interest . . 13 14 Repairs . . . . . 14 600 15 Supplies . . . . . 15 16 Taxes . . 16 6,000 17 Utilities . 17 18 Depreciation expense or depletion . 18 19 Other (list) 19 Total expenses. Add lines 5 through 19 . . . . . 20 25,300 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 . . . . . 21 -13,300 22 Deductible rental real estate loss after limitation, if any, on Form 8582 (see instructions) . . . . . 22 -13,300 23a Total of all amounts reported on line 3 for all rental properties . . . . . . . 1 . 1 1 1 1 . 23 12,000 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 14,500 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 . . 236 25,300 24 Income. Add positive amounts shown on line 21. Do not include any losses . . . 24 Losses. Add royalty losses from line 21 and rental real estate losses from line 22. Enter total losses here 25 -13,300 26 Total rental real estate and royalty income or (loss). Combine lines 24 and 25. Enter the result here. If Parts II, III, 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 -13,300 For Paperwork Reduction Act Notice, see the separate instructions. Cat. No. 11344L Schedule E (Form 1040) 2020Complete Dr. Beeper's Form 8582 (page 1). If required, use the minus sign to enter a "loss" as a negative number on the lines id and 4. However, per the instructions on the tax return, enter all numbers in Part II as positive amounts. OMB No. 1545-1008 Form 8582 Passive Activity Loss Limitations See separate instructions. 2020 Department of the Treasury Attach to Form 1040, 1040-SR, or 1041. Attachment Internal Revenue Service (99) Go to www.irs.gov/Form8582 for instructions and the latest information Sequence No. 88 Name(s) shown on return Identifying number George E. Beeper 775-88-9531 Part ] 2020 Passive Activity Loss Caution: Complete Worksheets 1, 2, and 3 before completing Part I. Rental Real Estate Activities With Active Participation (For the definition of active participation, see Special Allowance for Rental Real Estate Activities in the instructions. la Activities with net income (enter the amount from Worksheet 1, column (=)) | 1a b Activities with net loss (enter the amount from Worksheet 1, column (b)) 1b 13,300 Prior years' unallowed losses (enter the amount from Worksheet 1, column (C)) . . . . . 1c d Combine lines la, 1b, and 1c . . . . . 1d -13,300 Commercial Revitalization Deductions From Rental Real Estate Activities 2a Commercial revitalization deductions from Worksheet 2, column (2) . . . . 2a b Prior year unallowed commercial revitalization deductions from Worksheet 2, column (b) . . . . . . . . . 2b Add lines 2a and 20. . . . . . . . . . .. . . ..141 12151518151412121 121 18 151 191919191 2c ( All Other Passive Activities 3a Activities with net income (enter the amount from Worksheet 3, column (a)) 3a b Activities with net loss (enter the amount from Worksheet 3, column (b)) 3b c Prior years' unallowed losses (enter the amount from Worksheet 3, column (3) .. ... 3c Combine lines 3a, 3b, and 30 . . . . . . 3d 4 Combine lines 1d, 2c, and 3d. If this line is zero or more, stop here and include this form with your return; all losses are allowed, including any prior year unallowed losses entered on line 1c, 2b, or 3c. Report the losses on the forms and schedules normally used . . -13,300 If line 4 is a loss and: . Line 1d is a loss, go to Part II. . Line 2c is a loss (and line 1d is zero or more), skip Part II and go to Part III. . Line 3d is a loss (and lines 1d and 2c are zero or more), skip Parts II and III and go to line 15. Caution: If your filing status is married filing separately and you lived with your spouse at any time during the year, do not complete Part II or Part III. Instead, go to line 15. Part II Special Allowance for Rental Real Estate Activities With Active Participation Note: Enter all numbers in Part II as positive amounts. See instructions for an example. 5 Enter the smaller of the loss on line 1d or the loss on line 4 . . . . . . 5 13,300 6 Enter $150,000. If married filing separately, see instructions . . 150,000 7 Enter modified adjusted gross income, but not less than zero. See instructions . . . . . ... Note: If line 7 is greater than or equal to line 6, skip lines 8 and 9, enter -0- on line 10. Otherwise, go to line 8. Subtract line 7 from line 6 . . . 8 9 Multiply line 8 by 50% (0.5). Do not enter more than $25,000. If married filing separately, see instructions 9 10 Enter the smaller of line 5 or line 9 . 10 If line 2c is a loss, go to Part III. Otherwise, go to line 15. Part III Special Allowance for Commercial Revitalization Deductions From Rental Real Estate Activities Note: Enter all numbers in Part III as positive amounts. See the example for Part II in the instructions. 11 Enter $25,000 reduced by the amount, if any, on line 10. If married filing separately, see instructions 11 12 Enter the loss from line 4 . . . . . . .. 12 13 Reduce line 12 by the amount on line 10 . 13 14 Enter the smallest of line 2c (treated as a positive amount), line 11, or line 13 . . . . . . . . . . . . . . 14 Part IV Total Losses Allowed 15 Add the income, if any, on lines la and 3a and enter the total. . . . 15 Total losses allowed from all passive activities for 2020. Add lines 10, 14, and 15. See instructions to find out how to report the losses on your tax return . . . . . . . . . . . 16 For Paperwork Reduction Act Notice, see instructions. Cat. No. 63704F Form 8582 (2020)