Reference no: EM132893848
Question - Old man Tom is 43 and the quarterback of the Nampa Bay Sucs. In 2021, he was paid $32 million in salary. All social security and Medicare taxes were properly withheld from his paycheck in addition to Federal Income taxes of $ 11,500,000. No state income tax was withheld since he lives in Nampa, which is located in a state without an income tax. Tom also earned $ 12.5 million in endorsement income in 2021. Tom is married to Gisele, a super model. They have two children, Benjamin age 13 and Vivian age 9. Gisele made $ 28 million from her self-employed modeling activities during the year. Although Gisele is a Brazilian citizen, she is a resident alien in the United States, which means her worldwide income is subject to U.S. income tax. Brazil does not impose any taxes for its citizens who make their living outside Brazil. Tom and Gisele received interest income of $ 1,200,000 from U.S. Treasury securities, $ 800,000 from bonds issued by the city of the city of Foxboro, Massachusetts where Tom used to play and $ 700,000 in interest from commercial paper. They also received dividends of $ 450,000 from stock in U.S. corporations.
Tom owns two limited partnership interests. One partnership, Patriot, Ltd, generated ordinary income of $ 415,000 for Tom. In 2021, Tom sold the other limited partnership, Boston Teaparty for $ 34,000 cash and debt relief of $ 210,000. Tom's basis in his Boston Teaparty partnership interest at the time of sale was $ 235,000. During the year, Boston Teaparty generated a $ 410,000 ordinary loss for Tom. The partnership had suspended losses of $ 1,414,000. There were no basis or at-risk limitations on the losses.
Tom and Gisele bought a home for $ 24,000,000 near Nampa. The put $ 9,000,000 down and took out a mortgage for $ 15,000,000. During the year they paid interest of $ 800.000. The also paid property taxes of $ 78,000 into escrow. Tom contributed $ 450,000 in cash to the NFL Players benevolent fund, a qualified charity. Gisele donated some L'Oreal stock worth $ 325,000 to the Brazilian-American Friendship charity. She bought the stock 9 months ago for $ 285,000.
Required -
-Compute Tom and Gisele's adjusted gross income.
-Compute Tom and Gisele's Taxable Income.
-Compute Self-Employment tax owed by Tom and Gisele.