rchased a new car in Jan 2022 which cost $60k. The car is his main vehicle for the year which he will use to drive to and from work.  Employee salary: $300k in total, paying for 6 nail technicians, each $50k/year.   Utilities cost: $10k   Supplies (nail polishes, glitter, chemical, etc.): $10k  Nail salon equipment: $50k. Anthony to

CONCEPTS IN FED.TAX.,2020-W/ACCESS
20th Edition
ISBN:9780357110362
Author:Murphy
Publisher:Murphy
Chapter3: Income Sources
Section: Chapter Questions
Problem 30P
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  1. Anthony, one of your cousins, is operating a very successful luxury nail salon called An-Toe-Nail. Other than that, Anthony also works part-time as a freelance graphic designer. 

In 2022, Anthony have the income from his designing job of $100k and the revenue from the An-Toe-Nail salon is $800k. During 2022, below are items that Anthony spend money on: 

 

  • Anthony purchased a new car in Jan 2022 which cost $60k. The car is his main vehicle for the year which he will use to drive to and from work. 
  • Employee salary: $300k in total, paying for 6 nail technicians, each $50k/year.  
  • Utilities cost: $10k  
  • Supplies (nail polishes, glitter, chemical, etc.): $10k 
  • Nail salon equipment: $50k. Anthony told you that these equipment need to be purchased new every year for some reason. Since the nail salon is a luxury one, he spent twice the money to buy this luxury equipment (the similar but lower quality equipment only cost $25k). 

 

Anthony asks for your help in figuring out his taxable income for 2022 before the standard deduction. As a tax expert, you understand that what he means was to help him calculate his AGI.  

  1. What is Anthony Gross income in 2022? (Show calculation and explanation if needed) 
  1. What is Anthony Deduction for AGI in 2022? Show calculation and explanation. Answer without explanation will result in no credit 
  1. Provided that AGI = Total Gross income – Total Deduction for AGI. What is Anthony AGI for 2022? 
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