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1 0 . In addition to the investments discussed above, Paul owns 1 , 0 0 0 shares ( 1 % ) of Grubstake Mining & Development common stock. Grubstake is organized as an S corporation and has 1 0 0 , 0 0 0 shares outstanding. Grubstake reported taxable income of $ 2 0 0 , 0 0 0 and paid a distribution of $ 1 . 0 0 per share during the current year. Paul does not materially participate in Grubstake's activities. 1 1 . Paul slipped on a wet spot in front of a computer store last July. He broke his ankle and was unable to work for two weeks. He incurred $ 1 , 3 0 0 in medical costs, all of which were covered by the store's owner. The store also gave him $ 1 , 0 0 0 for pain and suffering resulting from the injury. ASCI did not pay his salary during the two weeks he was absent due to the accident. However, ASCI's disability insurance plan paid him $ 1 , 5 0 0 in disability pay for the time he was unable to work. Under this plan, ASCI pays the $ 5 0 0 disability insurance premiums as a taxable fringe benefit. The disability plan premiums and the disability benefit payments were not included in Paul ’ s W - 2 wages reported in paragraph 3 . 1 2 . Paul received a Form 1 0 9 9 - B from his broker for the sale of the following securities during the current year. The adjusted basis amounts were reported to the IRS. Security Sale Date Purchase Date Sales Price CommissionPaid Sale His Basis Nebraska bonds 0 3 / 1 4 / 2 5 1 0 / 2 2 / 1 3 $ 2 , 3 0 0 $ 2 4 0 $ 1 , 8 9 0 Cassill Corp ( 5 0 0 shares ) 1 0 / 2 0 / 2 5  0 2 / 1 9 / 1 8 $ 8 , 5 0 0 $ 4 2 5 $ 9 , 7 6 0 1 3 . In addition to the taxes withheld from his salary, he also made timely estimated federal tax payments of $ 1 7 5 per quarter and timely estimated state income tax payments of $ 1 5 0 for the first three quarters. The $ 1 5 0 fourth - quarter state payment was made on December 2 8 of the current year. Paul would like to receive a refund for any overpayment. 1 4 . In August of the current year, he received a federal refund of $ 6 0 and a state tax refund of $ 2 2 0 related to the tax returns he filed for the prior year. His itemized deductions for the prior year were $ 2 3 , 9 0 0 .

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1 0 . In addition to the investments discussed above, Paul owns 1 , 0 0 0 shares ( 1 % ) of Grubstake Mining & Development common stock. Grubstake is organized as an S corporation and has 1 0 0 , 0 0 0 shares outstanding. Grubstake reported taxable income of $ 2 0 0 , 0 0 0 and paid a distribution of $ 1 . 0 0 per share during the current year. Paul does not materially participate in Grubstake's activities. 1 1 . Paul slipped on a wet spot in front of a computer store last July. He broke his ankle and was unable to work for two weeks. He incurred $ 1 , 3 0 0 in medical costs, all of which were covered by the store's owner. The store also gave him $ 1 , 0 0 0 for pain and suffering resulting from the injury. ASCI did not pay his salary during the two weeks he was absent due to the accident. However, ASCI's disability insurance plan paid him $ 1 , 5 0 0 in disability pay for the time he was unable to work. Under this plan, ASCI pays the $ 5 0 0 disability insurance premiums as a taxable fringe benefit. The disability plan premiums and the disability benefit payments were not included in Paul ’ s W - 2 wages reported in paragraph 3 . 1 2 . Paul received a Form 1 0 9 9 - B from his broker for the sale of the following securities during the current year. The adjusted basis amounts were reported to the IRS. Security Sale Date Purchase Date Sales Price CommissionPaid Sale His Basis Nebraska bonds 0 3 / 1 4 / 2 5 1 0 / 2 2 / 1 3 $ 2 , 3 0 0 $ 2 4 0 $ 1 , 8 9 0 Cassill Corp ( 5 0 0 shares ) 1 0 / 2 0 / 2 5  0 2 / 1 9 / 1 8 $ 8 , 5 0 0 $ 4 2 5 $ 9 , 7 6 0 1 3 . In addition to the taxes withheld from his salary, he also made timely estimated federal tax payments of $ 1 7 5 per quarter and timely estimated state income tax payments of $ 1 5 0 for the first three quarters. The $ 1 5 0 fourth - quarter state payment was made on December 2 8 of the current year. Paul would like to receive a refund for any overpayment. 1 4 . In August of the current year, he received a federal refund of $ 6 0 and a state tax refund of $ 2 2 0 related to the tax returns he filed for the prior year. His itemized deductions for the prior year were $ 2 3 , 9 0 0 .

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Asked by: praseetha
Created at: 2025-11-26 00:13:59

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# Paul’s 2024 Tax Summary: Key Events and Tax Implications ## 10. Grubstake Mining & Development S Corporation Stock - **Ownership:** Paul owns 1,000 shares (1%) of Grubstake Mining & Development (100,000 total shares). - **Taxable Income Reported by Grubstake:** $200,000. - **Distribution Paid:** $1.00 per share ($1,000 to Paul). - **Material Participation:** Paul does **not** materially participate (passive activity). - **Taxation:** - **K-1 Income:** Paul is allocated 1% of taxable income = $2,000. - **Distribution:** The $1,000 cash is not taxable if it does not exceed Paul’s basis. - **Passive Activity:** Income is passive; subject to passive activity loss limitations. --- ## 11. Accident and Disability Payments - **Medical Costs:** $1,300 (covered by store owner, not taxable). - **Pain and Suffering Payment:** $1,000 (non-taxable if from physical injury). - **Disability Pay:** $1,500 from ASCI’s disability insurance plan. - **Premiums:** ASCI paid $500 as a taxable fringe benefit (already taxed to Paul). - **Benefit:** $1,500 is **taxable** since premiums were included in Paul’s taxable income. --- ## 12. Securities Sales (Form 1099-B) | Security | Sale Date | Purchase Date | Sales Price | Commission | Basis | Gain/Loss | |------------------|-------------|--------------|-------------|------------|--------|---------------| | Nebraska bonds | 03/14/25 | 10/22/13 | $2,300 | $240 | $1,890 | $2,300 - $240 - $1,890 = $170 gain | | Cassill Corp (500 shares) | 10/20/25 | 02/19/18 | $8,500 | $425 | $9,760 | $8,500 - $425 - $9,760 = -$1,685 loss| **Notes:** - Both are long-term transactions. - Use net gain/loss for Schedule D. --- ## 13. Estimated Tax Payments - **Federal:** $175 per quarter × 4 = $700 (timely). - **State:** $150 per quarter × 4 = $600. - Note: The fourth quarter state payment ($150) was made on December 28 of the current year. - **Refund:** Paul wants any overpayment refunded. --- ## 14. Prior-Year Tax Refunds - **Federal:** $60 refund received (not taxable). - **State:** $220 refund received. - **Itemized Deductions Last Year:** $23,900. - **Taxability:** If Paul received a tax benefit from deducting state taxes, part or all of the $220 refund may be taxable income this year (use the state tax refund worksheet). --- ## Summary Table | Event | Amount | Taxable? | Notes | |----------------------|------------------|----------------------|-----------------------------------------| | S Corp K-1 Income | $2,000 | Yes (passive) | Passive activity income | | S Corp Distribution | $1,000 | Usually not taxable | Unless exceeds basis | | Medical Costs Paid | $1,300 | No | | | Pain & Suffering | $1,000 | No | Due to physical injury | | Disability Pay | $1,500 | Yes | Premiums included in income | | Nebraska Bonds Gain | $170 | Yes (capital gain) | Long-term | | Cassill Stock Loss | -$1,685 | Yes (capital loss) | Long-term; offsets gains | | Federal Refund | $60 | No | | | State Refund | $220 | Maybe | If tax benefit received last year | | Federal Est. Taxes | $700 | N/A | Credit against tax owed | | State Est. Taxes | $600 | N/A | Credit against tax owed | --- ## Key Actions for Preparation - Report S corporation K-1 passive income on Schedule E. - Include taxable disability pay as "Other Income." - Use Schedule D for capital gains/losses from sales. - Determine taxability of state tax refund (complete worksheet). - Apply estimated payments to reduce balance due or create a refund. - Check for any passive activity loss limitations for S corp income. --- **Note:** - If you need a filled tax form example or further breakdowns, provide additional details. - [No images are present in this data.]

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