Compute income tax liability, Taxation

Assignment Help:

Dan and Cheryl are married, file a joint return, and have no children. Dan is a pharmaceutical salesman and Cheryl is a nurse at a local hospital. Dan%u2019s SSN is 400-20-1000 and Cheryl%u2019s SSN is 200-40-8000 and they reside at 2033 Palmetto Drive, Nashville, TN 28034. Dan is paid according to commissions from sales; however, his compensation is subject to withholding of income and payroll taxes. He also maintains an office in his home as the pharmaceutical company does not have an office in Nashville and when he is not traveling, Dan operates his business from his home office. During 2012, Dan earned total compensation from his job of $125,000, on which $20,000 of federal income taxes were withheld, $4,624 of OASDI, and $1,813 of Medicare taxes. No state income taxes were withheld. Cheryl earned a salary during 2012 of $45,400, on which federal taxes withheld were $5,000, OASDI of $1,907, and Medicare taxes of $658.

During 2012, Dan and Cheryl had interest income from corporate bonds and bank accounts of $1,450 and qualified dividends from stocks of $5,950. Dan also actively trades stocks and had the following results for 2012:
LTCG $4,900
LTCL (3,200)
STCG 0
STCL (7,800)

He had no capital loss carryovers from previous years.
Dan does a considerable amount of travel in connection with his job. He uses his own car and is reimbursed $0.30 per business mile. During 2012, Dan drove his car a total of 38,000 miles (evenly throughout the year), of which 32,000 were business related. He also had business-related parking fees and tolls during the year of $280. Dan uses the mileage method for deducting auto expenses. Dan also had the following travel expenses while away from home during the year:
Hotel $4,200
Meals 820
Entertainment of customers 1,080
Tips 100
Laundry and cleaning 150
Total $6,350

Dan was reimbursed for the travel expenses by his employer, pursuant to an accountable plan, in the amount of $5,080.
Dan%u2019s expenses in connection with his office in the home were as follows:
Office supplies $ 290
Telephone (separate line) 1,100
Utilities (entire house) 3,400
Homeowners insurance 600
Interest and property taxes (see below for totals)
Repairs and maintenance (entire house) 800

Dan%u2019s office is 300 square feet and the total square footage of the house is 3,000 square feet. Dan and Cheryl purchased the house on June 12, 1998, for $280,000, of which $40,000 is attributable to the land.

Cheryl incurred several expenses in connection with her nursing job. She paid $450 in professional dues, $200 in professional journals, and $350 for uniforms.

Dan and Cheryl had the following other expenditures during the year:
Health insurance premiums (after-tax) $ 4,400
Doctor bills 470
Real estate taxes on home 2,200
Personal property taxes 400
Mortgage interest 15,600
Charitable contributions%u2014cash 9,000
Charitable contributions%u2014GE stock owned for 5 years:
FMV $12,000
Adjusted basis 2,000
Tax preparation fees 750
Compute Dan and Cheryl%u2019s income tax liability for 2012. Disregard the alternative
minimum tax.

 


Related Discussions:- Compute income tax liability

Calclution, Ask question #Minimum 100 words Problem 4-42 (LO. 3, 4) Faye, G...

Ask question #Minimum 100 words Problem 4-42 (LO. 3, 4) Faye, Gary, and Heidi each have a one-third interest in the capital and profits of the FGH Partnership. Each partner had a c

Recognized gain or allowable loss, I need help determining the character of...

I need help determining the character of the recognized gain or allowable loss in each of the cases listed below. In each case, these are all of the tax payer realized gains or los

Tax payable or tax credit, Tax Payable or Tax Credit Stuart's Guitars,...

Tax Payable or Tax Credit Stuart's Guitars, which has a company tax rate of 30%, is planning to sell one of its old lathes. The machine, purchased 5 years ago for $50,000, had

Digressive tax, what is the dis advantage of digressive tax?

what is the dis advantage of digressive tax?

Case study, Prepare a 2012 Schedule D, including Form 8949 and Form 4797 ba...

Prepare a 2012 Schedule D, including Form 8949 and Form 4797 based on the data provided. Provide a memo summarizing any assumptions made, if any. You do not need to prepare the tax

How much cash did a firm collect from its customers, Q. How much cash did a...

Q. How much cash did a firm collect from its customers, given the following fact set?  Beginning and ending accounts receivable were $50 and $60, respectively.  Beginning and endin

Prepare a state tax return, David builds and maintains web applications for...

David builds and maintains web applications for a number of clients. He does a majority of his work from his home office, but he frequently drives to the client site to meet with h

Vat, meaning of vat

meaning of vat

Statements on Standards for Tax Services, 28) Explain how Treasury Departme...

28) Explain how Treasury Department Circular 230 differs from the AICPA’s Statements on Standards for Tax Services.

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd