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Compute the business income

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Reference no: EM132494606

Married Couple and 2 children 16 and 17

  • Husband earns $75,000 (and withholds tax of $10,000)
  • Wife earns teaching $45,000 (and withholds tax of $6,000)

In the summer, the wife runs a summer camp program and has the following items:

Income $12,000

Expenses:

Marketing 1,500

Contract labor 2,500

Equipment 14,000 (bought in May and used 100% in business)

Contract labor 2,000

Interest Income CDS 3,000

Mortgage Interest 10,000

Property Taxes 5,000

Medical 14,000

Business expense 2,000 (Non-Reimbursed husband job)

  • They will file married filing jointly. Take only MACRS depreciation on the equipment but do not elect to expense under 179. Please show your work.

Question 1: Compute their business income.

Question 2: Compute their adjusted gross income.

Question 3: Compute their itemized deductions.

Question 4: Compute their taxable income.

Question 5: Compute their tax liability.

Reference no: EM132494606

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