Corresponding Test Questions

After you have made the required entries and completed the couple$$s tax return in BlockWorks, return

to the test in Block Academy and answer the corresponding questions about this taxpayer.

Case Study Introduction

Esmeralda $$Essie$$ Thomas was married to Richard Thomas until his sudden death in a car accident on

March $13,2022.$ Essie is the administrator of Richard$$s estate. She would like to file a final joint return.

$($All of Richard$$s assets passed to Essie upon his death outside of probate, and no Form $1041$ or Form

$706$ was filed for his estate.$)$

Scenario

$1.$ Retirement Income

In $2019,$ Richard began contributing to a Roth $401($k$)$ through his employer. Essie was the sole

beneficiary of the plan, and it passed to her upon his death. She did not roll over any of the plan funds

into another account or plan.

To pay some unexpected bills, Essie took a nonqualified distribution of $$15,000$ from the inherited Roth

$401($k$)$ plan. Essie$$s Form $1099-$R appears below.

Senior Tax Analyst Certification Test $(2023)$

$2.$ Rental Income

Richard owned a small convenience store building, located at $1724$ Green Tree Road, Your City, YS

XXXXX $($the Green Tree property$),$ which he rented to a local business owner until the end of January.

Richard$$s rental activities with respect to this property did not rise to the level of a trade or business for

the purpose of the qualified business income deduction, but he was an active participant in the rental

activity for the purpose of the rental special allowance. Richard was not required to file any Forms $1099$

related to this activity.

Richard received $$5,000$ in rental income for the month of January. His former tenant provided a Form

$1099-$MISC reporting this payment. Details about the property appear in the table below. The Form

$1099-$MISC also appears below.

The only expense related to the rental activity in $2022$ was one month of depreciation on the building.

Information about the building appears below.

Description Placed in Service Cost

Green Tree Property March $12,2015$ $$100,000($including $$10,000$ for

land$).$

As discussed in the next section, Richard disposed of the Green Tree property on January $31,2022.$

Senior Tax Analyst Certification Test $(2023)$

$3.$ Like$-$Kind Exchange

Early this year, Richard decided that he wanted to exchange the Green Tree property for a similar

property closer to their home. He identified a replacement commercial building located at $77$ Weeping

Willow Circle, Your City, YS XXXXX $($the Weeping Willow property$).$

Richard identified the replacement property and completed the exchange on January $31,2022.$ Details

of the exchange appear below.

Property Given Up

Description: Green Tree Property $(1724$ Green Tree Road$)$

FMV at time of exchange: $$350,000($per sales agreement$)$

Property Received

Description: Weeping Willow Property $(77$ Weeping Willow Circle$)$

FMV at time of exchange: $$300,000$

Additional cash received: $$50,000$

The exchange was not with a related party. Essie would like to defer the gain on this exchange to the

maximum extent allowed by law.

Note: The Weeping Willow property did not have a tenant in place at the time of the exchange. As of

the end of $2022,$ the new property has not been placed into service as a rental. There was no income or

expense related to this property in $2022$