Reference no: EM132325146

Taxation Questions -

Question 1 - Trevor is a single individual who is a cash-method, calendar-year taxpayer. For each of the next two years (year 1 and year 2), Trevor expects to report AGI of $104,000, contribute $8,450 to charity, and pay $3,400 in state income taxes. (Amounts to be deducted should be indicated with a minus sign.)

Required:

a. Estimate Trevor's taxable income for year 1 and year 2 using the 2018 amounts for the standard deduction for both years.

b. Now assume that Trevor combines his anticipated charitable contributions for the next two years and makes the combined contribution in December of year 1. Estimate Trevor's taxable income for each of the next two years using the 2018 amounts for the standard deduction.

c. Trevor plans to purchase a residence next year, and he estimates that additional property taxes and residential interest will cost $3,200 and $28,000, respectively, each year. Estimate Trevor's taxable income for each of the next two years (year 1 and year 2) using the 2018 amounts for the standard deduction and also assuming Trevor makes the charitable contribution of $8,450 and state tax payments of $3,400 in each year.

d. Assume that Trevor makes the charitable contribution for year 2 and pays the real estate taxes for year 2 in December of year 1. Estimate Trevor's taxable income for year 1 and year 2 using the 2018 amounts for the standard deduction.

Question 2 - Betty operates a beauty salon as a sole proprietorship. Betty also owns and rents an apartment building. This year Betty had the following income and expenses. You may assume that Betty will owe $2,610 in self-employment tax on her salon income, with $1,305 representing the employer portion of the self-employment tax. You may also assume that her divorce from Rocky was finalized in 2016.

Interest income	$14,510
Salon sales and revenue	88,460
Salaries paid to beauticians	46,380
Beauty salon supplies	23,610
Alimony paid to her ex-husband, Rocky	7,050
Rental revenue from apartment building	35,000
Depreciation on apartment building	13,950
Real estate taxes paid on apartment building	11,940
Real estate taxes paid on personal residence	6,850
Contributions to charity	4,930

Complete page 1 of Form 1040 for Betty.

Download the Tax Form and enter the required values in the appropriate fields.

Attachment:- Assignment Files.rar