Determine taxable incomes

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M and W are husband and wife.  They are filing joint tax returns for both 2013 and 2014 and have zero dependents.  Below are their income and deductions for each year.  Determine their taxable incomes, if any, for each year.

Item

2013

2014

Interest Income

4,000

3,000

Business gross receipts

400,000

225,000

Business cost of sales

200,000

175,000

Other business expenses

125,000

125,000

M's Salary (not from the business)

80,000

40,000

Net Capital Gains/(losses)

15,000

(3,000)

Interest Expense on Mortgage

25,000

22,000

Property taxes

4,000

3,000

Medical expenses (before any limitation)

10,000

0

Casualty loss (personal, before any limits but after insurance reimbursement)

0

4,000

 

 

Reference no: EM131776528

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