Ken is 63 years old and unmarried. He retired at age 55 when he sold his business, Understock.com. Though Ken is retired, he is still very active. Ken reported the following financial information this year. Assume Ken files as a single taxpayer.
Ken won $1,200 in an illegal game of poker (the game was played in Utah, where gambling is illegal).
Ken sold 1,000 shares of stock for $32 a share. He inherited the stock two years ago. His tax basis (or investment) in the stock was $31 per share.
Ken received $25,000 from an annuity he purchased eight years ago. He purchased the annuity, to be paid annually for 20 years, for $210,000.
Ken received $13,000 in disability benefits for the year. He purchased the disability insurance policy last year.
Ken decided to go back to school to learn about European history. He received a $500 cash scholarship to attend. He used $300 to pay for his books and tuition, and he applied the rest toward his new car payment.
Kenâs son, Mike, instructed his employer to make half of his final paycheck of the year payable to Ken as a gift from Mike to Ken. Ken received the check on December 30 in the amount of $1,100.
Ken received a $610 refund of the $3,600 in state income taxes his employer withheld from his pay last year. Ken claimed $6,350 in itemized deductions last year (the standard deduction for a single filer was $6,300).
Ken received $30,000 of interest from corporate bonds and money market accounts.
Complete page 1 of Form 1040 for Ken.
Ken's address is 1001 N.W. 93 Street, Miami, FL 33168.
Ken's Social security number: 412-34-5670
|Head of household (with qualifying person). If the qualifying person is a child|
|Check only one box.||2|
|Married filing jointly (even if only one had income)||but not your dependent, enter this child's name here. â¶|
|Married filing separately. Enter spouseâs||5|
|Qualifying widow(er) with dependent child|
|SSN above and full name here. â¶|
|Yourself. If someone can claim you as a dependent, do not check box 6a||Boxes checked on 6a and 6b||1|
|Spouse||No. of children on 6c who:|
|c||Dependents:||(2) Dependent's||(3) Dependent's||(4) X if child under||â Lived with you|
|(1) First name||Last name||SSN||Relationship||age 17 qualifying||â Did not live with you due to divorce|
|(xxx-xx-xxxx)||to you||for child tax credit.||or separation (see instruction)|
|If more than four dependents, see instructions and check here|
|Dependents on 6c not entered above|
|Add numbers on lines above â¶||1|
|d||Total number of exemptions claimed â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦|
|Income||7||7 Wages, salaries, tips, etc. Attach Form(s) W-2||7|
|8a||8a Taxable interest. Attach Schedule B if required||8a|
|Attach Form(s) W-2 here. Also attach Forms W-2G and 1099-R if tax was withheld.||b||Tax-exempt interest. Do not include on line 8a||8b|
|9a||Ordinary dividends. Attach Schedule B if required||9a|
|10||Taxable refunds, credits, or offsets of state and local income taxes||10|
|12||Business income or (loss). Attach Schedule C or C-EZ||12|
|13||Capital gain or (loss). Attach Schedule D if required.||13|
|14||Other gains or (losses). Attach Form 4797||14|
|15a||IRA distributions||15a||b Taxable amount||15b|
|If you did not get a W-2, see instructions.||16a||Pensions and annuities||16a||b Taxable amount||16b|
|17||Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E.||17|
|18||Farm income or (loss). Attach Schedule F||18|
|20a||Social security benefits||20a||b Taxable amount||20b|
|21||Other income. List type and amount||21|
|22||Combine the amounts in the far right column for lines 7 through 21. This is your total income â¶||22|
|Gross||24||Certain business expenses of reservists, performing artists, and||24|
|Income||fee-basis government officials. Attach Form 2106 or 2106-EZ|
|25||Health savings account deduction. Attach Form 8889||25|
|26||Moving expenses. Attach Form 3903||26|
|27||Deductible part of self-employment tax. Attach Schedule SE||27|
|28||Self-employed SEP, SIMPLE, and qualified plans||28|
|29||Self-employed health insurance deduction||29|
|30||Penalty on early withdrawal of savings||30|
|31a||Alimony paid||b Recipientâs SSN (xxx-xx-xxxx)||31a|
|33||Student loan interest deduction||33|
|34||Tuition and fees. Attach Form 8917||34|
|35||Domestic production activities deduction. Attach Form 8903||35|
|36||Add lines 23 through 35||36|
|37||Subtract line 36 from line 22. This is your adjusted gross income . . . . . â¶||37|
|For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions.||Form 1040 (2016)|
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