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51-54. Eve, age 65 and single with no dependents, provided the following information for her 2018...

51-54. Eve, age 65 and single with no dependents, provided the following information for her 2018 income tax return: Gross income $55,000 Capital loss $ 4,000 Total itemized deductions $ 4,400

Eve's capital loss deduction to reach AGI is: a. $0. b. $3,000. c. $4,000. d. None of the above.

Eve's standard deduction, if it is used, is: a. $1,600. b. $13,600. c. $1,000. d. $12,000. e. None of the above.

Eve's personal exemption is: a. $4,150. b. $0. c. $5,750. d. $4,050. e. None of the above.

Eve's taxable income is: a. $38,400. b. $40,000. c. $40,050. d. $40,150. e. None of the above.

Solutions

Expert Solution

Answers are as under :
1 Eve's capital loss deduction to reach AGI is: a. $0. b. $3,000. c. $4,000. d. None of the above.
Option b. $3,000
Reason : All Long capital gain are required to be set off against long term loss first and all short term term gain can be setoff against short term loss first. After if any long or short term loss remains, it can be setoff against each other.
During the year if there is no short term or long term gain , but only capital loss is there , then the same can be set off against other income from business, salary interest etc. subject to maximum $ 3,000/-.
2 Eve's standard deduction, if it is used, is: a. $1,600. b. $13,600. c. $1,000. d. $12,000. e. None of the above.
Option d. $12,000
Reason : Tax payer can claim standard deduction or itemized deduction whichever is more beneficial to them. In case of single tax payer , maximum standard deduction is $ 12,000 which is more than the Eve's Itemized deduction. There fore it is advisable to claim $ 12,000/-
3 Eve's personal exemption is: a. $4,150. b. $0. c. $5,750. d. $4,050. e. None of the above.
Option b. $0
Reason : Personal tax exemption for the year 2018 is removed / eliminated
4 Eve's taxable income is: a. $38,400. b. $40,000. c. $40,050. d. $40,150. e. None of the above.
Option b. $ 40,000
Particular $
Gross income 55,000.00
Less : Capital Loss     3,000.00
Less : Standard deduction 12,000.00
Taxable Income 40,000.00

ekkarill92 answered 1 week ago
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