Bruce and Amanda are married during the tax year. Bruce is a botanist at Green Corporation. Bruce earns a salary of $56,000 per year. Green Corporation has an accountable reimbursement plan. During the year, Bruce has $5,000 of employee expenses. Green Corporation reimburses Bruce for only $4,000 of expenses. Bruce decides to put $5,500 into a Traditional IRA. Amanda owns a financial consulting firm as a sole proprietor (it qualifies as a full trade or business). Amanda generates $80,000 of revenues during the year. She has the following business payments associated with her firm: Utilities: $2,000 Office Rent: $14,000 Self-Employment Tax: $5,000 Salary for her secretary: $20,000 Fines/Penalties: $8,000 Payroll Taxes (Employer Portion): $1,000 Business Meals: $2,000 Bribe to police officer to forgive parking violation $1,500 Due to the income and expenses above, Amanda has $39,500 of Qualified Business Income for the purposes of the QBI deduction. Also, during the year a tornado damaged the roof of their personal residence. They purchased the home five years ago for $250,000. The value of the home after the tornado was $200,000. Bruce and Amanda do not know the fair market value of the home immediately before the tornado, but the repair cost was $30,000. The home is located in a federally declared disaster area. They also have the following personal expenses during the year: Medical Expenses: $19,750 State & Local Taxes $4,000 Federal Income Tax Payments: $6,000 The personal exemption amount for the tax year is: $0 The standard deduction amounts are listed below: Single: $12,950 Head of Household: $19,400 Married Filing Jointly: $25,900 Questions (10): 1) What amount of Amanda’s gross business revenue is included in Gross Income? 2) How much of a deduction does Bruce get for the contribution to his IRA? 3) Bruce & Amanda's Gross Income: 4) What is the total deductible amount of Amanda’s business expenses? 5) Bruce & Amanda's Adjusted Gross Income: 6) What is the deductible amount of their medical expenses after limitations? 7) What is the deductible amount of their deductible casualty loss after limitations? 8)What is the the total deductible amount of their allowable itemized dedutions after limitations? (do not include QBI deduction for this answer) 9) What is the amount of their Qualified Business Income (QBI) deduction? 10) Bruce & Amanda's Taxable Income:

Bruce and Amanda are married during the tax year. Bruce is a botanist at Green Corporation. Bruce earns a salary of $56,000 per year. Green Corporation has an accountable reimbursement plan. During the year, Bruce has $5,000 of employee expenses. Green Corporation reimburses Bruce for only $4,000 of expenses. Bruce decides to put $5,500 into a Traditional IRA. Amanda owns a financial consulting firm as a sole proprietor (it qualifies as a full trade or business). Amanda generates $80,000 of revenues during the year. She has the following business payments associated with her firm: Utilities: $2,000 Office Rent: $14,000 Self-Employment Tax: $5,000 Salary for her secretary: $20,000 Fines/Penalties: $8,000 Payroll Taxes (Employer Portion): $1,000 Business Meals: $2,000 Bribe to police officer to forgive parking violation $1,500 Due to the income and expenses above, Amanda has $39,500 of Qualified Business Income for the purposes of the QBI deduction. Also, during the year a tornado damaged the roof of their personal residence. They purchased the home five years ago for $250,000. The value of the home after the tornado was $200,000. Bruce and Amanda do not know the fair market value of the home immediately before the tornado, but the repair cost was $30,000. The home is located in a federally declared disaster area. They also have the following personal expenses during the year: Medical Expenses: $19,750 State & Local Taxes $4,000 Federal Income Tax Payments: $6,000 The personal exemption amount for the tax year is: $0 The standard deduction amounts are listed below: Single: $12,950 Head of Household: $19,400 Married Filing Jointly: $25,900 Questions (10): 1) What amount of Amanda’s gross business revenue is included in Gross Income? 2) How much of a deduction does Bruce get for the contribution to his IRA? 3) Bruce & Amanda's Gross Income: 4) What is the total deductible amount of Amanda’s business expenses? 5) Bruce & Amanda's Adjusted Gross Income: 6) What is the deductible amount of their medical expenses after limitations? 7) What is the deductible amount of their deductible casualty loss after limitations? 8)What is the the total deductible amount of their allowable itemized dedutions after limitations? (do not include QBI deduction for this answer) 9) What is the amount of their Qualified Business Income (QBI) deduction? 10) Bruce & Amanda's Taxable Income:

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter1: Federal Income Taxation—an Overview

Section: Chapter Questions

Problem 78TPC: Bonnie is married and has one child. She owns Bonnies Rib Joint, which produces a taxable income of...

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Question

Bruce decides to put $5,500 into a Traditional IRA.

Amanda owns a financial consulting firm as a sole proprietor (it qualifies as a full trade or business). Amanda generates $80,000 of revenues during the year. She has the following business payments associated with her firm:

Utilities: $2,000

Office Rent: $14,000

Self-Employment Tax: $5,000

Salary for her secretary: $20,000

Fines/Penalties: $8,000

Payroll Taxes (Employer Portion): $1,000

Business Meals: $2,000

Bribe to police officer to forgive parking violation $1,500

Due to the income and expenses above, Amanda has $39,500 of Qualified Business Income for the purposes of the QBI deduction.

Also, during the year a tornado damaged the roof of their personal residence. They purchased the home five years ago for $250,000. The value of the home after the tornado was $200,000. Bruce and Amanda do not know the fair market value of the home immediately before the tornado, but the repair cost was $30,000. The home is located in a federally declared disaster area.

They also have the following personal expenses during the year:

Medical Expenses: $19,750

State & Local Taxes $4,000

Federal Income Tax Payments: $6,000

The personal exemption amount for the tax year is: $0

The standard deduction amounts are listed below:

Single: $12,950

Head of Household: $19,400

Married Filing Jointly: $25,900

Questions (10):

1) What amount of Amanda’s gross business revenue is included in Gross Income?

2) How much of a deduction does Bruce get for the contribution to his IRA?