Question

In: Accounting

A) Determine the AGI this year for the taxpayer(s). B) Determine the amount of itemized deductions...

A) Determine the AGI this year for the taxpayer(s).

B) Determine the amount of itemized deductions the taxpayer(s) has (have) available this year.

C) Using the 2017 standard deduction amounts (assuming no additional amounts for age or blindness) from Appendix D in of your book, state whether the taxpayer(s) itemize or take the standard deduction. I am not asking for you to state the amount of either the standard deduction or the itemized deductions chosen.

D) Use the individual tax formula and a flat 20% tax rate on all types of taxable income to determine the amount of taxes due or refund amount. Remember to clearly marking the answer as either the amount of tax due or a refund due (e.g. refunds are negative amounts as represented with parentheses or a negative sign, alternatively you can just write “refund” next to it). Assume AMT does not apply, and there are no tax credits available.

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2. Shela is single and works for a law firm. In the 2017 tax year, she made $110,000 this year in salary and $10,000 of gross interest income from a corporate bond. Her law firm withheld $16,000 of tax from her salary this year. In addition to the above, the following occurred this year:

- She paid $7,000 in interest on her mortgage for her primary residence.

- She had a rental loss (had greater expenses as a landlord than revenue) by $2,000.

- She sold stock she had held for 9 months at $4,000 less than her tax basis at the time of the sale.

- Shela owned a 20% interest in a partnership during the year. The partnership had a $20,000 loss from operations during the year and made no distributions.

- Shela volunteers for the Red Cross using her legal skills to do administrative work for the charity. She estimates her time volunteering is worth $5,000.

Solutions

Expert Solution

A) Determine the AGI this year for the taxpayer(s).

Wages and interest income $ 120,000
Less: Rental Loss - $ 2000
Stock loss - $ 3000
Partnership loss - $ 4000
AGI $ 111,000

Determine the amount of itemized deductions the taxpayer(s) has (have) available this year.

$ 9000

Using the 2017 standard deduction amounts (assuming no additional amounts for age or blindness) from Appendix D in of your book, state whether the taxpayer(s) itemize or take the standard deduction. I am not asking for you to state the amount of either the standard deduction or the itemized deductions chosen.

Use itemized deductions

Use the individual tax formula and a flat 20% tax rate on all types of taxable income to determine the amount of taxes due or refund amount. Remember to clearly marking the answer as either the amount of tax due or a refund due (e.g. refunds are negative amounts as represented with parentheses or a negative sign, alternatively you can just write “refund” next to it). Assume AMT does not apply, and there are no tax credits available.

Taxable Income $ 97950
Taxable Liability $ 19590
Prepayment $ 16000
Tax Payable $ 3590

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