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Individual Form 1040

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Alice Johnson, Social Security number 222-23-3334, is a single taxpayer and is employed as a secretary by State University of Florida. She has the following items pertaining to her income tax return for 2005:

1) Received a $20,000 salary from her employer, who withheld $3,000 federal income tax.

2) Received a gift of 1,000 shares of Ace Corporation stock with a $100,000 FMV from her mother. She also received $4,000 of cash dividends from the Ace Corporation. The dividends are not qualified dividends.

3) Received $1,000 of interest income on bonds issued by the City of Tampa.

4) Received a regular stock dividend (nontaxable under Sec. 305) of 50 shares of Ace Corporation stock with a $5,000 FMV.

5) Alice's employer paid $2,000 of medical and health insurance premiums on her behalf.

6) Received $12,000 alimony from her ex-husband.

7) State University provided $60,000 of group term life insurance. Alice is 42 years old and is not a key employee. The table in the text is applicable.

8) Received a $1,000 cash award from her employer for being designated the Secretary of the Year.

9) Total itemized deductions are $8,000.

Complete Form 1040 and accompanying schedules for Alice Johnson's federal income tax return for the current year.

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Solution Preview

One item that must be calculated is the group term life insurance that must be included in income. It is calculated as follows: $60,000 of coverage - $50,000 excluded amount = $10,000 / $1,000 = 10 * .1 = $1 * 12 = $12 to be added into her income. ...

Solution Summary

This solution contains an individual income tax return Form 1040 for 2005.