None Problem 11-55 (LO. 3, 8, 11)Bonnie and Jake (ages 35 and 36, respectively) are married with no dependents and live together in Montana(not a community property state). Because Jake has large medical expenses, they seek your advice aboutfiling separately to save taxes. Their income and expenses for 2023 are as follows:Bonnie's salary$42,500Jake's salary26,000Interest income (joint)1,500Rental loss from actively managed rental property(23,000)Jake's unreimbursed medical expenses8,500All other itemized deductions:"BonnieJake"None subject to limitations19,0006,400Determine whether Bonnie and Jake should file jointly or separately for 2023.Click here to access the tax rate schedule.Round the total tax to the nearest dollar.BonnieJakeJointAGI43,25026,75047,000Total itemized deductions $19,00012,89430,375Taxable income24,25013,85616,625 ✔Tax2,720 X1,614 XShould Bonnie and Jake file jointly or separately for 2023?Jointly

Income tax is based on income. Suppose a person has salary income, capital gain income, house rent…

Answered: Bonnie and Jake (ages 35 and 36,…

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter11: Investor Losses

Section: Chapter Questions

Problem 55P

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LO.4, 9 Walter and Nancy provide 60% of the support of their daughter (age 18) and son-in-law (age 22). The son-in-law (John) is a full-time student at a local university, and the daughter (Irene) holds various part-time jobs from which she earns 11,000. Walter and Nancy engage you to prepare their tax return for 2019. During a meeting with them in late March 2020, you learn that John and Irene have filed a joint return. What tax advice would you give based on the following assumptions? a. All parties live in Louisiana (a community property state). b. All parties live in New Jersey (a common law state).
Addison Parker (Social Security number 123-45-6785), single and age 32, lives at 3218 Columbia Drive, Spokane, WA 99210. She is employed as regional sales manager by VITA Corporation, a manufacturer and distributor of vitamins and food supplements. Addison is paid an annual salary of 83,000 and a separate travel allowance of 28,000. In order to access the travel allowance, VITA requires adequate accounting by Addison. Addison participates in VITAs contributor) health and 401(k) plans. During 2019, she paid 4,500 for her share of the medical insurance and contributed 11,000 to the 401(k) retirement plan. Addison uses her automobile 70% for business and 30% for personal. The automobile, a Toyota Avalon, was purchased new on June 30, 2017, for 37,000 (no trade-in was involved). Depreciation has been claimed using the MACRS 200% declining-balance method, and no 179 election was made in the year of purchase. (For depreciation information, see the IRS Instructions for Form 4562, Part V.) During 2019, Addison drove 15,000 miles and incurred and paid the following expenses relating to the automobile: Because VITA does not have an office in Spokane, the company expects Addison to maintain one in her home. Out of 1.500 square feet of living space in her apartment, Addison has set aside 300 square feet as an office. Expenses for 2019 relating to the office are listed below. Addisons employment-related expenses (except for the trip to Korea) for 2019 are summarized below. Most of Addisons business trips involve visits to retail outlets in her region. Store managers and their key employees, as well as some suppliers, were the parties entertained. The business gifts were boxes of candy costing 30 (25 each plus 5 for wrapping and shipping) sent to 18 store managers at Christmas. The continuing education was a noncredit course dealing with improving management skills that Addison took online. In July 2019, Addison traveled to Korea to investigate a new process that is being developed to convert fish parts to a solid consumable tablet form. She spent one week checking out the process and then took a one-week vacation tour of the country. The round-trip airfare was 3,600, and her expenses relating to business were 2,100 for lodging (300 each night), 1,470 for meals, and 350 for transportation. Upon returning to the United States, Addison sent her findings about the process to her employer. VITA was so pleased with her report that it gave her an employee achievement award of 10,000. The award was sent to Addison in January 2020. Besides the items already mentioned, Addison had the following receipts in 2019: Regarding the city lot (located in Vancouver), Addison purchased the property in 2004 for 16,000 and held it as an investment. Unfortunately, the neighborhood where the lot was located deteriorated, and property values declined. In 2019, Addison decided to cut her losses and sold the property for 13,000. The sailboat was used for pleasure and was purchased in 2015 for 16,500. Addison sold the boat because she purchased a new and larger model (see below). While at the Spokane airport, Addison found an unmarked envelope containing 55,000 in 50 bills. Because no mention of any lost funds was noted in the media, Addison kept the money. Addisons expenditures for 2019 (not previously noted) are summarized below. Addison keeps careful records regarding sales taxes. In 2019, the sales tax total was unusually high due to the purchase of a new sailboat. In 2019, Addison decided to pay her church pledge for both 2019 and 2020. The insurance premium was on a policy covering her fathers life. (Addison is the designated beneficiary under the policy.) Addisons employer withheld 8,600 for Federal income tax purposes, and she applied her 800 overpayment for 2018 toward the 2019 tax liability. Compute Addisons Federal income tax payable (or refund) for 2019. In making the calculation, use the Fax Rate Schedule and disregard the application of the alternative minimum tax (AMI), which is not discussed until Chapter 12.
LO.4, 8 Joyce, a widow, lives in an apartment with her two minor children (ages 8 and 10), whom she supports. Joyce earns 33,000 during 2019. She uses the standard deduction. a. Calculate the amount, if any, of Joyces earned income credit. b. During the year, Joyce is offered a new job that has greater future potential than her current job. If she accepts the job offer, her earnings for the year will be 39,000; however, she is afraid she will not qualify for the earned income credit. Using after-tax cash-flow calculations, determine whether Joyce should accept the new job offer. Since the child tax credit will be the same under either scenario, you can ignore it for purposes of this analysis.
Ashley Panda lives at 1310 Meadow Lane, Wayne, OH 43466, and her Social Security number is 123-45-6777. Ashley is single and has a 20-year-old son, Bill. His Social Security number is 111-11-1112. Bill lives with Ashley, and she fully supports him. Bill spent 2018 traveling in Europe and was not a college student. He had gross income of 4,655 in 2018. Bill paid 4,000 of lodging expenses that Ashley reimbursed after they were fully documented. Ashley paid the 4,000 to Bill using a check from her sole proprietorship. That amount is not included in the items listed below. Ashley had substantial health problems during 2018, and many of her expenses were not reimbursed by her health insurance. Ashley owns Panda Enterprises, LLC (98-7654321), a data processing service that she operates as a sole proprietorship. Her business is located at 456 Hill Street, Wayne, OH 43466. The business activity code is 514210. Her 2018 Form 1040, Schedule C for Panda Enterprises shows revenues of 315,000, office expenses of 66,759, employee salary of 63,000, employee payroll taxes of 4,820, business meal expenses (before the 50% reduction) of 22,000, and rent expense of 34,000. The rent expense includes payments related to renting an office (30,000) and payments related to renting various equipment (4,000). There is no depreciation because all depreciable equipment owned has been fully depreciated in previous years. No fringe benefits are provided to the employee. Ashley personally purchases health insurance on herself and Bill. The premiums are 23,000 per year. Ashley has an extensive stock portfolio and has prepared the following analysis: Note: Ashley received a Form 1099B from her stockbroker that included the adjusted basis and sales proceeds for each of her stock transactions. The per-share cost includes commissions, and the per-share selling price is net of commissions. Also, the dividends are the actual dividends received in 2018, and these are both ordinary dividends and qualified dividends. Ashley had 800 of interest income from State of Ohio bonds and 600 of interest income on her Wayne Savings Bank account. She paid 25,000 of alimony to her former husband. His Social Security number is 123-45-6788. Ashley itemizes her deductions and provides the following information, which may be relevant to her return: Ashley made a 26,000 estimated Federal income tax payment, does not want any of her taxes to finance presidential elections, has no foreign bank accounts or trusts, and wants any refund to be applied against her 2019 taxes. Compute Ashleys net tax payable or refund due for 2018. If you use tax forms for your computations, you will need Form 1040 and its Schedules 1, 4, 5, A, C, D, and SE and Form 8949. Ashley qualifies for the 199A deduction for qualified business income. Be sure to include that in your calculations. Suggested software: ProConnect Tax Online.
LO.2 During 2019, Susan incurred and paid the following expenses for Beth (her daughter), Ed (her father), and herself: Beth qualifies as Susans dependent, and Ed would also qualify except that he receives 7,400 of taxable retirement benefits from his former employer. Beths psychiatrist recommended Red River Academy because of its small classes and specialized psychiatric treatment program that is needed to treat Beths illness. Ed, who is a paraplegic and diabetic, entered Heartland in October. Heartland offers the type of care that he requires. Upon the recommendation of a physician, Susan has an air filtration system installed in her personal residence. She suffers from severe allergies. In connection with this equipment, Susan incurs and pays the following amounts during the year: The system has an estimated useful life of 10 years. The appraisal was to determine the value of Susans residence with and without the system. The appraisal states that the system increased the value of Susans residence by 2,200. Ignoring the AGI floor, what is the total of Susans expenses that qualifies for the medical expense deduction?

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Bonnie and Jake (ages 35 and 36, respectively) are married with no dependents and live together in Montan (not a community property state). Because Jake has large medical expenses, they seek your advice about filing separately to save taxes. Their income and expenses for 2023 are as follows: