Reference no: EM133085874
Question - Justin Stone was an employee of DataCare Services, Inc. His salary was $45,000 through November 10, 2020, when he was laid off. DataCare Services provided medical insurance for Justin and his family during his employment and agreed to continue this coverage through the end of 2020. He received $7,000 of unemployment compensation from November 11, 2020, through December 31, 2020. FICA withholdings were as follows: Social Security of $2,790 ($45,000 × 6.2%) and Medicare of $653 ($45,000 × 1.45%). Justin lives at 112 Green Road, Crown City, OH 45623. His Social Security number is 111-11-1118. Justin owned an apartment building until November 22, 2020, when he sold it for $200,000 (the apartment building's address is 4826 Orange Street, Crown City, OH 45623). For 2020, he had rent revenue of $33,000. He incurred and paid expenses as follows: $4,568 of repairs, $12,000 of mortgage interest, $10,000 of real estate taxes, and $1,000 of miscellaneous expenses. He purchased the building on January 2, 2014, for $125,000 (the related land was purchased for $10,000). The building generated an operating profit each year that Justin owned it. Justin received $13,000 in cash as a gift from his mother to help "tide him over" while he was unemployed. He also withdrew $10,000 from his checking account. He "invested" $300 in lottery tickets during the year but had no winnings. Other relevant tax information for Justin follows:
On November 22, 2020, Justin sold for $3,500 equipment that had been used for repairing various items in the apartments. The equipment was purchased for $25,000 on July 10, 2013, and was fully depreciated prior to 2020.
- Justin has $3,000 of unrecaptured § 1231 losses from prior years.
- Justin is age 38; is single; is divorced; and has custody of his nine-year-old son, Flint.
- Justin provides more than 50% of Flint's support. Flint's Social Security number is 123-45-6788.
- Justin had $1,000 interest income from Blue Corporation bonds.
- Justin had $1,500 interest income from a State Bank certificate of deposit.
- Justin had a $2,000 0%/15%/20% long-term capital gain distribution from the Brown Stock Investment Fund.
- Justin had the following itemized deductions: $4,600 real estate taxes on his home; $8,900 mortgage interest on his home; $4,760 charitable contributions (all in cash, all properly documented, and no single contribution exceeding $25); $4,300 state income tax withholding during 2020; $2,000 state estimated income tax payments during 2020; $2,600 sales taxes paid.
- Justin does not own or use any virtual currency.
- Justin does not want to donate to the Presidential Election Campaign Fund.
Justin received the appropriate coronavirus recovery rebates (economic impact payments); related questions in ProConnect Tax should be ignored.
Justin had $10,000 of Federal income tax withholding during 2020 and made total Federal estimated income tax payments of $12,000 during 2020.
Compute Justin's 2020 net tax payable or refund due. Ignore the § 199A deduction for qualified business income (if applicable). Suggested software: ProConnect Tax.