Practice Set #1

Eric Amoth (Social Security Number 551-11-1111) is 50 years old and married to Mary Amoth, age 34, (Social Security Number 552-45-6789). They live at 1313 Mockingbird Lane in Mockingbird Heights CA 92659. They file a joint return. Neither is interested in helping to fund the Presidential Election Campaign Fund. Both Eric and Mary have not worked this year. They had saved their money and planned to live at the beach for a year. 2022 is that year. They have made no estimated tax payments for 2022 as they said they wont earn any income. They would like their occupation listed as Investor. Eric and Mary come to you for help with the preparation of their 2022 tax return and have provided the details for the following transactions:

To fund the Amoth's beach year they have chosen to sell several gifts that they have received through the years. The first of these was 100 shares of Dupont stock they had received as a gift in January 2005. Uncle Billy had a basis in the stock of $70,000. At the time of the gift the FMV of the stock was $100,000. Eric sells the stock for $100,000 on 11/1/22.

The Amoths also sell the 100 shares of Home Depot stock. In 2014, the gift had a FMV of $100,000 and Uncle Billy's basis was $120,000. Eric sold all 100 shares for $130,000 on 1/15/2022.

Eric also sold for $90,000 on 6/1/2022 the 100 shares of Apple stock that Uncle Billy gave him in 2017. The FMV at the time of the gift was $100,000 and ironically Uncle Billy's basis was $120,000.

Lastly, Eric decided to sell for $115,000 the 50 shares of Dollar Tree that Uncle Bill gave him for Christmas of 2016. Ironically, Uncle Billy's basis in these shares was the same $120,000 and FMV at the time of the gift was, ironically, $100,000. All shares sold 7/4/22.

Mary received a acre of land as an inheritance. Her mother passed away on 1/31/2022. At the time of her death, the land had a FMV of $8,000. The alternative valuation date was not elected. Mary sold the land for $12,000 on 7/4/2022. Mary invested a portion of the proceeds from the sale into Disney stock for her niece. The value of the Disney stock at the time of purchase was $5,000.

Eric and Mary realized mid-year that not earning any income for a year and living off savings was not going to be realistic. They reluctantly decided to sell their rental property. They did not rent the property in 2022 and there were no rental expenses. They had intended to move back into the rental house and sell their principal residence once they came back from their break, but decided they would rather not sell their principal residence. They decided they would sell their principal residence in Practice Set #2. They had originally purchased the rental at 623 East 68th Street, also in Mockingbird Heights on 6/1/2005, paying $80,000. At the time, $60,000 was allocated to the building and $20,000 allocated to the land. On 9/15/2020, the Amoths purchased a stove and a refrigerator for $2,000 total. The MACRS depreciation on the house was $41,455 and the depreciation on the stove/refrigerator was $1,539. On 7/4/2022, The Amoths sell the entire rental property for $100,700. They said their neighbor, a CPA, told them it would be appropriate to allocate $25,000 of the sales price to the Land, $700 to the appliances and $75,000 to the building. You agree to use this allocation of the sales price.

Please prepare the following forms

Form 1040

Schedule 1

Schedule D

Form 4797

Form 8949 - note that the stock sales are not reported to the Amoths on a Form 1099. They must be detailed on Form 8949.