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Case 7b46e35c is Jordan M. Brennan, a fictional software engineer in Chicago. Tax year 2025, federal and Illinois, 15 pages.

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The narrative

Every case starts with what the preparer was told and handed, written out. This one has 13 passages. Each is numbered and marked with its source: the taxpayer, or one of the documents.

given/narrative.mdCase 7b46e35c, Illinois

Who Jordan is

Jordan Michael Brennan was born on May 12, 1994. Jordan was single all year and has no dependents, and nobody else can claim Jordan as a dependent. N1 · Taxpayer

Home for all of 2025 was 1840 N Damen Avenue, Unit 3R, Chicago, Illinois 60647. Jordan was an Illinois resident for the full year. N2 · Taxpayer

Jordan gave the preparer a Social Security number, a phone number and an email address. They are left out of this copy. On the documents and the return they are blacked out, along with the employer and payer identification numbers and the state ID number. N3 · Taxpayer

Work

Jordan is a software engineer at Lakeshore Cloudworks, Inc., a public company (ticker LCWK), and lived and worked in Chicago all year. The employer’s group health plan covered Jordan for all 12 months. N4 · Taxpayer

Pay

The Form W-2 from Lakeshore Cloudworks shows:

Box What it is Amount
1 Wages $215,216.00
2 Federal income tax withheld $47,900.00
3 Social Security wages $176,100.00
5 Medicare wages $238,716.00
6 Medicare tax withheld $3,809.83
12, code D Deferred into the 401(k) plan $23,500.00
12, code DD Cost of employer health coverage $9,480.00
14 Restricted stock unit income $52,400.00
16 Illinois wages $215,216.00
17 Illinois income tax withheld $10,653.19

N5 · Form W-2

Jordan explained the restricted stock income. It is two vests: 500 shares on March 15, 2025 at $58.40 a share, and 400 shares on September 15, 2025 at $58.00 a share. The company kept some of the shares to cover tax and delivered the rest. Of the September shares, 250 were delivered and are still held. N6 · Taxpayer

Stock sales

Form 1099-B from Calumet Harbor Securities, LLC reports four sales of Lakeshore Cloudworks stock. The basis of all four was reported to the IRS.

Sold Shares Acquired Proceeds Cost basis Wash sale loss disallowed Term
February 10, 2025 120 December 15, 2023 $6,672.00 $5,868.00 Long
June 20, 2025 300 June 15, 2024 $18,045.00 $15,360.00 Long
August 20, 2025 150 March 15, 2025 $8,115.00 $8,760.00 $645.00 Short
November 10, 2025 160 March 15, 2025 $10,272.00 $9,344.00 Short

N7 · Form 1099-B

Jordan says the cost basis the broker reports for these shares already includes the restricted stock income. N8 · Taxpayer

Stock options

Form 3921 from Lakeshore Cloudworks shows that Jordan exercised incentive stock options on June 2, 2025: 1,600 shares at an exercise price of $22.00 a share, when the shares were worth $59.40 a share. The options were granted on February 15, 2022. N9 · Form 3921

Jordan paid $35,200.00 in cash to exercise. All 1,600 shares were still held on December 31, 2025, and no option shares were sold during the year. N10 · Taxpayer

Everything else

Jordan made no estimated tax payments for 2025 and has no investment income other than the stock sales above. N11 · Taxpayer

Jordan did not buy, sell, receive or exchange any digital assets in 2025, and has no foreign accounts or foreign assets. N12 · Taxpayer

Jordan does not want $3 to go to the Presidential Election Campaign Fund, has no identity protection PIN, and gave no bank details for a refund or payment. N13 · Taxpayer

Three documents come with it

In the sample copy, the Social Security number, phone number, email address, employer and payer identification numbers and state ID number are blacked out.

  • Form W-2Lakeshore Cloudworks, Inc., 2 pages
  • Form 1099-BCalumet Harbor Securities, LLC, 4 pages
  • Form 3921Lakeshore Cloudworks, Inc., 1 page

The prepared return

Nine forms and schedules: Form 1040, Schedule 2, Schedule D, Form 8949, Form 6251, Form 8959, Form 8960, Illinois IL-1040, Schedule IL-WIT.

Form 1040 (2025)Case 7b46e35c, Illinois
  1. 1aWages from Form W-2, box 1215,216Includes $52,400 of restricted stock. The broker’s cost basis already counts it, so it is taxed once.
  2. 7aCapital gain4,417After a $645 wash-sale loss is disallowed and moved into the basis of the new shares.
  3. 11aAdjusted gross income219,633
  4. 15Taxable income203,883
  5. 16Tax41,712
  6. 17Alternative minimum tax, from Schedule 27,661From exercising stock options and keeping the shares. Nothing was sold, and regular tax ignores it.
  7. 23Other taxes, from Schedule 2516Additional Medicare Tax of $348 and net investment income tax of $168.
  8. 24Total tax49,889
  9. 33Total payments48,249
  10. 37Amount owed1,640
Form IL-1040 (2025)Illinois resident return
  1. 1Federal adjusted gross income219,633
  2. 12Illinois tax at 4.95%10,731
  3. 25Illinois tax withheld10,653
  4. 33Tax due78

Every figure here is read from the return. The marked lines are where the decisions sit.

Every line, as data

The return also comes as a spreadsheet of 126 lines. 17 are copied from a box on a document, 29 are carried from another line, 71 are formulas over other lines, and 9 are amounts set by law. A script recomputes every formula and confirms every carried line.

FormLineWhat it isAmountHowFrom
Form 10401aWages from Form W-2, box 1215,216documentw2#1
Form 8949I.r1.gPart I, 150 shares sold August 20: adjustment, code W645document1099b.p1#1g
Form 8949I.r1.hPart I, 150 shares sold August 20: gain or loss0computed8949:I.r1.d - 8949:I.r1.e + 8949:I.r1.g
Form 62512iExercise of incentive stock options59,840document3921#3 3921#4 3921#5
Form 625111Alternative minimum tax7,661computed6251:9 - 6251:10
Form 89597Additional Medicare Tax on wages348computedround(8959:6 * 0.009)
Illinois IL-104012Tax at 4.95%10,731computedround(IL1040:11 * 0.0495)

Seven of the 126 rows, as they appear in the file.

The workpaper: seven questions

These are the questions this return made the preparer answer. In the workpaper, each one comes with what the return does, why, the authority, and what the decision is worth, so a grader knows how much a mistake matters.

  1. Restricted stock income is taxed once

    The W-2 reports $52,400 of restricted stock income, and shares from those vests were sold. Where does that income go?

  2. A wash sale moves the loss; it does not erase it

    150 shares were sold at a $645 loss on August 20, and new shares of the same stock vested on September 15. Is the loss allowed?

  3. Exercising options can cost tax with no sale

    1,600 incentive stock options were exercised and none of the shares were sold. Is anything taxable?

  4. Two surtaxes use two different measures

    Income is over $200,000. Which additional taxes apply, and what is each one measured on?

  5. The state return follows its own rules

    How does Illinois tax this income?

  6. The standard deduction, and why the choice changes nothing here

    Standard deduction or itemized deductions?

  7. No penalty for underpaying during the year

    $1,640 is owed with the return and no estimated payments were made. Is there an underpayment penalty?

The whole case file

Case ID 7b46e35c-b49f-48a1-b935-da612987d6e2. In the 2025 sample set, this case is the folder named IL01. This is what arrives when you ask for it.

given/

What a preparer, or a model, is allowed to see.

  • narrative.mdThe taxpayer’s year, written out: who they are, what happened and what they handed over.
  • documents/w2-lakeshore-cloudworks.pdfForm W-2 from Lakeshore Cloudworks, Inc.
  • documents/1099b-calumet-harbor-securities.pdfForm 1099-B from Calumet Harbor Securities, LLC.
  • documents/3921-lakeshore-cloudworks.pdfForm 3921 from Lakeshore Cloudworks, Inc.

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The answer side. Keep it away from the model.

  • return.pdfThe prepared return, printed by the tax software.
  • lines.csvEvery line with a figure, as data, with where the figure comes from.
  • workpaper.mdThe decisions: the question, what the return does, why, the authority and what it is worth.

case.json sits beside the two folders. It names the case, lists every file with its checksum, and carries your ID for the case next to ours.

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