Question

Jack and Jane are married and file a joint return for 2020. They have wage income of $150,000; net long-term capital gains of $20,000; net short-term capital gains of $5,000; corporate bond interest of $3,000; share of S corporation income of $8,000; cash distributions from the S corporation of $3,000; ordinary cash dividends of $6,000; qualifying cash dividends of $5,000; inheritance received from deceased aunt’s estate of $18,000; deductions for AGI (Adjusted Gross Income) of $11,000; itemized deductions of $26,000; tax credits of $2,000; and estimated tax payments and withholding of $22,000. Their applicable standard deduction is $24,800. Using the appropriate tax schedule, compute their tax due or refund. [Note – you must show and label all calculations, including the AGI, Taxable Income, and Tax Liability amounts.]

Answer 1

Total Tax Owned = $16,640

Step-by-step explation:

TAX OF JACK AND JILL
wages Income		$150,000.00
Net short term capital Gain		5,000.00
Corporate bond interest		3,000.00
Cash distribution from S corp		3,000.00
Ordinary cash dividend		6,000.00
Qualifying cash dividend		5,000.00
		$172,000.00
Less:	Deduction for AGI	11,000
	itemised deduction	26,000
	Tax credit	2,000
	Withholding	22,000
Taxable Income		$111,000.00
Tax owned		$16,640.00
$9,875 plus 22% of the amount over $80,250
Long term capital gain tax
Long term gain = 20,000
Tax Rate = 15%
LTCG = 20,000 × 15% = 3,000
Total Tax Owned = $19,640
($16,640 + 3,000)