Tax return project

Spencer W. Duck 2020 U.S. Individual Tax Return (Form 1040) Spencer W. Duck is single and lives at 321 Hickory Drive in Ames, lowa 86701. His eight-year-old son, Mitch, lives with him nine months of the year in Spencer's rented condominium. Mitch lives with his mother, Daisy - Spencer's ex-wife, during the summer months. His mother provides half of Mitch's support and Spencer has agreed to allow her to claim Mitch as her dependent. Spencer has the following items pertaining to his 2020 Federal income tax return: o On March 15, 2020, he sold for $6,500 an antique watch fob. The fob was a gift from his grandfather on January 10, 2000, when its FMV was $1,000. The fob was purchased by his grandfather on April 2, 1981 for $1,500. o 10 shares of Texsun Industries, Inc. stock held as an investment were sold for $26,000 on December 5, 2020. The securities were inherited from his uncle, who died on April 10, 2016 when the fair market value of the securities was $19,000. The uncle purchased the securities on January 10, 2014, for $15,700. (No code for Form 8949 is applicable) o He has a short-term capital loss carryover of $550 into 2020. . Mitch has interest income of $1,050 from a Bank of Ames certificate of deposit which his mother put in his name. Neither Spencer, Daisy nor Mitch want Mitch to file a separate tax return and elect to include the interest income on the appropriate parent's tax return. . Other than those items listed above, Spencer had no other itemized deductions. Spencer also has no foreign bank accounts nor other foreign assets or financial interests. Spencer is age 35 (SSN: 333-22-1111). Mitch is age 8. (SSN: 111-23- 4567). Other than Mitch, Spencer has no children. • As an information technology specialist, Spencer receives a $199,800 salary from his employer (World Electronics, LLC), who withheld $33,300 in federal income tax. • He paid $20,000 in alimony to his ex-wife (Daisy, SSN: 222-44-5555). Mitch was divorced in 2016. His divorce decree was finalized in 2017 and requires him to pay alimony. • He received a state income tax refund in 2020 of $3,500 for state income taxes withheld in 2019. Last year (2019), he used the standard deduction when completing his 2019 Federal income tax return. In 2020, he had state income tax withheld from his wages of $6,500. Other items: o Alcon Corporation bond interest income $7,600 o City of Drake bond interest income $7,000 o Pear Corporation Dividend (qualified) $4,500 o South Lake Mutual Fund - Capital Gain Distribution $900 • Ordinary Dividend (qualified) $950 Gambling winnings from playing the slot machines: $15,000. Gambling losses - $2,000. Spencer's nickname is "The Lucky Duck." • Spencer had the following capital asset transactions in 2020: o On March 1, 2020, land was sold for $36,000. The land was received as a property settlement on January 10, 2017, when the land's FMV was $32,000. His ex-wife's basis for the land, purchased on January 10, 2002, was $28,500. O A personal use computer acquired on March 2, 2019 for $4,000 was sold for $1,580 on July 10, 2020. A membership card for a prestigious Ames City country club was sold for $10,500 on August 15, 2020. The card was acquired on October 10, 2015, for $6,000. o On August 16, 2020, Spencer sold for $3,700 his 10 shares of York Corporation purchased as an investment on February 16, 2020 for $2,600. (No code for Form 8949 is applicable). Complete Form 1040 and accompanying schedules for Spencer W. Duck's Federal income tax return for the 2020 tax year. Use all rates and deductions, that are applicable for 2020. Ignore the additional credit for child and dependent care expenses and the alternative minimum tax. Ignore any penalties, but consider any applicable credits. In filling out Form 8949, all transactions will have box (C) or (F) checked. There is no need to fill out more than one Form 8949. The return should contain all information needed so that Spencer should be able to immediately sign the return and send it to the IRS when you present it to him