Internal Revenue Service United States Department of the Treasury
Level Basic Advanced Military International

Summary and Exercises

Practice Exercises

Larry and Donna Rusk Scenario 2

Taxpayer Documents:

Click here to see the Rusks' social security cards.

Click here to see the Rusks' Form 13614-C, Intake/Interview Sheet

Click here to see Larry Rusk's Form W-2

Click here to see Donna Rusk's Form W-2

Click here to see Donna Rusk's Form 1099-G

Click here to see the Rusks' Form 1099-C

Interviewer Notes

  • Larry and Donna are married and want to a file a joint return.
  • Larry is a middle school art teacher.
  • Donna lost her job and received unemployment.
  • They stopped making their house payments in December 2013, and the bank foreclosed on August 16, 2014. They had owned and lived in the home since June 10, 2000. The cost of the home was $150,000. The home was never used for business or rental purposes. The balance of the mortgage principal at the time of foreclosure was $133,000.
  • The bank issued a 1099-C for debt canceled.
  • They want to have their refund direct deposited: Routing #062005690 Acct. #123876-4.

For practice using the tax preparation software, complete the Rusks' tax return using the Practice Lab on Link & Learn Taxes and answer questions 1—4.

Question 1

What is the amount of canceled debt excluded from gross income on Form 982, line 2?

A.
B.
C.
D.

Question 2

What is the net long-term capital gain or loss shown on Schedule D, line 15?

A.
B.
C.
D.

Question 3

Which of the following would cause the Rusks' return to be out of scope for VITA/TCE volunteers?

A.
B.
C.
D.

Question 4

$

Question 5

What is the Rusks' total income on Form 1040, line 22?

A.
B.
C.
D.