Spencer W. Duck is single and lives at 321 Hickory Drive in Ames, Iowa 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 was
awarded custody of Mitch.
Spencer has the following items pertaining to his 2020 Federal income tax return:
• Spencer is age 35 (SSN: 333-22-1111). Mitch is age 10. (SSN: 111-23-
4567). Other than Mitch, Spencer has no children.
• As an information technology specialist, Spencer receives a $195,000
salary from his employer (World Electronics, LLC), who withheld $35,300
in federal income tax.
• He paid $18,000 in alimony to his ex-wife (Daisy, SSN: 222-44-5555).
They were divorced in 2017. The divorce decree was finalized in 2018
and requires Spencer to pay alimony.
• He received a state income tax refund in 2021 of $3,500 for state income
taxes withheld in 2020. Last year (2020), he used the standard deduction
when completing his 2020 Federal income tax return.
• In 2021, he had state income tax withheld from his wages of $8,200.
• 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 2021:
o On March 1, 2021, land was sold for $36,000. The land was
received as a property settlement on January 10, 2018, 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, 2020 for $4,000
was sold for $1,580 on July 10, 2021.
o A membership card for a prestigious Ames City country club was
sold for $10,500 on August 15, 2021. The card was acquired on
October 10, 2016, for $6,000.
o On August 16, 2021, Spencer sold for $3,700 his 10 shares of York
Corporation purchased as an investment on February 16, 2021 for
First Income Tax Return Project – Acct 3315 -005 (Fall Semester 2022) – P a g e | 4
o On March 15, 2021, Spencer sold for $6,500 an antique watch fob.
The fob was a gift from his grandfather on January 10, 2001, 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, 2021. The securities were
inherited from his uncle, who died on April 10, 2017 when the fair
market value of the securities was $19,000. The uncle purchased
the securities on January 10, 2014, for $15,700.
o Purchased 10 stock options for Krispy Kreme Company common
stock on February 14, 2021 which expired on October 1, 2021. The
options cost $850 and were allowed to expire.
o He has a short-term capital loss carryover of $550 into 2021.
• Mitch has interest income of $2,000 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 items of
income or itemized deductions. Spencer also has no foreign bank
accounts nor other foreign assets or financial interests. He also had no
cryptocurrency transactions in 2021.
Complete Form 1040 and accompanying schedules for Spencer W. Duck’s
Federal income tax return for the 2021 tax year. Use all rates and deductions,
that are applicable for 2021. Ignore all credits, the alternative minimum tax, net
investment income tax and any applicable penalties. Do consider the child tax
credit. If you believe that the child tax credit is applicable, then use the rules for
2022 in determining the amount of the child tax credit.
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. No codes are required for the
You may make-up any personal information for Spencer, Daisy, or Mitch not
contained in this project.