Question

1. For tax year 2017. Marty is 17 years old, in high school, and is claimed as a depended by his parents. He earned $950 in 2017 at a summer job; he has no other income.

a. Will Marty’s employer send Him a W2 for this small amount?

b. If Marty files a tax return what will be the amount of his standard deduction?

c. What will be his personal exemption amount on his tax return?

d. Under what conditions should Marty file a return?

2. What is the difference between deductions for AGI and deductions from AGI?

3. During 2017, Jenna had the following transactions:

Salary                                                                                               $45,000

Loan from bank to buy a car                                              8,000

Business loss (filed on Sch C)                                              2,000

Alimony paid                                                                              6,000

Child support paid                                                                  8,000

Casino winnings (the casino didn’t give her

any paperwork)                   1,540

Gift from father                                                                         12,000

In November 2017 she sold stock for $6,000 that she purchased In January of 2017 for $3,500

a. What is Jenna’s AGI?

b. If Jenna is single, has no dependents and does not itemize, what is her taxable income?

c. Should Jenna figure her tax using the tax tables or tax rate schedule? Why?

d. What is Jenna’s 2017 federal income tax liability using the tax table?

4. Lisa is single and has a 4 year old daughter who lives with her. What is her correct filing status?

5. A taxpayer had a salary of 35,000 and the following transactions:

i.Sold collectibles for 3,000 (basis 2,000, held 18 months)

ii.Sold stock for 5,000 (basis 8,000, held 9 months)

iii.Sold stock for 6,000 (basis 5,000, held 2 years)

a. What is the overall, net effect of these asset sales on the taxpayers AGI?

b. What is the character of the income or loss from the above capital asset transactions? And what is the character of the taxpayers taxable income overall. Ordinary, capital [28%, 25%, {0,15,20%}]?, Explain.

Answer 1

a. Will Marty’s employer send Him a W2 for this small amount?	Yes	Marty not earn enough from his summer job to owe income tax. But his employer usually must withhold Social Security and Medicare taxes from his pay.
b. If Marty files a tax return what will be the amount of his standard deduction? = $950 + $350 = $1300	$1,300.00	For 2017, the standard deduction for a taxpayer who can be claimed as a dependent by another taxpayer cannot exceed the greater of (a) $1,050 or (b) $350 + the dependent's earned income.
c. What will be his personal exemption amount on his tax return?	$0.00	If you can be claimed as a dependent on another person's tax return, you cannot claim a personal exemption for yourself.
d. Under what conditions should Marty file a return?	Marty must file a return in any of the following circumstances:
	Unearned income was more than $1,050
	Earned income was more than $6,350
	Gross income was more than the larger of $1,050 or on earned income up to $6,000 plus $350