Reference no: EM132968576
Question - The Sahara's have been married for as long as anyone can remember and have 5 children Bill (18), Charlie (13), Fred (12), Teddy (10) and Elizabeth (9).
Bill (18) graduated from high school and is in his first year of full-time study at Virginia tech University.
Charlie (13) Fred (11), and Teddy (10) and Elizabeth (9) all attend a K-12 schools and have a caregiver 3 days a week while Molly and Mike are both away from home working.
Mike works as a consultant and earns a salary of $320,000 dollars a year. Molly operates an organic farm out of their home. Their farm, Sahara's Oasis, reported revenues of $160,000 and associated expenses of $16,500 (including MACRS depreciation on farming equipment).
Below is all the additional financial information for the Saharas:
-State income taxes of $6,700. Federal tax withholding of $50,000.
-$6,200 of real estate property taxes.
-State tax refund of $800 (they took the standard deduction last year)
-They receive municipal bond interest of $3,000.
-They receive private activity bond interest of $5,000.
-$13,000 interest on their home mortgage.
-$15,000 of unreimbursed medical expenses
-$8,500 in childcare expenses for after school care for Fred, Teddy and Elizabeth.
-$7,700 in tuition for Bill to attend University.
-$3,500 in room and board for Bill to attend University.
-$4,000 interest on a $50,000 home-equity loan. They used the loan to pay for off credit cards and buy a new car.
-State sales taxes of $4,500
-Tax preparation fees $1,500.
-MasterCard interest $300.
-The Saharas's donated an old car to "Kars for Kids." They paid $15,000 for the car and the FMV at the time of the donation was $5,400.
-$3,000 cash charitable contributions to qualified charities.
-They purchased 200 shares of HP stock on January 1, 2018 for $40 per share. They sell all 200 shares for $55 per share on Jan 12, 2020.
-They also purchased 100 shares of Facebook stock on January 1, 2012 at $20 per share. As of Dec 31, 2020 Facebook, was worth $195 per share.
-depreciation of $36 will be a positive adjustment for AMT purposes.Please show your intermediate calculations as neatly as possible as this will facilitate partial credit.
Required -
What is their Gross Income?
What is their AGI?
What is their taxable Income?
What is their Alternative minimum taxable income (AMTI)?
What is their tentative minimum tax (TMT)?
How much AMT do the Saharas owe?
What is the amount of their Federal income tax refund or payment?