Question

Connor is not married and supports Connor's 12 year old child who lives with Connor and has gross income of $2,650 (the child's gross income). Connor works as a self-employed realtor and earned commissions of $146,000 during 2019. Connor’s business expenses were $18,900 and the only other income was interest of $7,300. Connor’s other information follows:

Contribution to solo(k) retirement plan                                                            $ 5,500

Loss on sale of Alphatech stock held 2 years                                                     -3,200

Mortgage interest on primary residence    6,950

State and local property tax on residence    4,350

Property tax included in personal auto registration 960

State sales taxes paid                                                                                              370

State income taxes paid 3,800

Charitable contributions of cash    3,350

Political contributions                                                                                      550

All information is for 2019.

Calculate Connor's adjusted gross income and taxable income. Show your work!

AGI = $____________                               Taxable Income = $____________

Answer 1

Particulars	Amount	Amount
Earned income		146,000
Expenses		(18,900)
Interest income		7,300
Net capital loss		(3,200)
Gross income		131,200
Retirement contribution		(5,500)
Half of self-empl taxes		(8,979)
AGI		116,721
Itemized deductions:
Medical expenses	-
Less: 7.5% of AGI	(8,754)	-
Home mortgage interest		6,950
State income tax		3,800
Property tax		4,350
Charity		3,350
Total itemized		18,450
Standard deduction		12,200
Higher of both		(18,450)
Personal exemptions		-
Taxable income		98,271

Half of self-employment taxes = (146000-18900)*92.35%*50%

AGI is 116,721

Taxable income is 98,271