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

Importance of creating a surplus budget, a) Using the above information you...

a) Using the above information you are to construct Fiona's Cash Flow Statement and then explain to her the importance of creating a surplus budget. b) The Net Worth Statement e

Calculate the market price, In an effort to reduce alcohol consumption, the...

In an effort to reduce alcohol consumption, the government is considering a $1 tax on each gallon of liquor sold (the tax is levied on producers). Suppose that the supply curve for

Individual taxation, #queTonya had the following items for last year: Salar...

#queTonya had the following items for last year: Salary $40,000 Short-term capital gain 12,000 Nonbusiness bad debt (25,000) Long-term capital gain 8,000 For the current year, Tony

The effect of the disposition, At the beginning of 2010,Marquee Inc. has tw...

At the beginning of 2010,Marquee Inc. has two assets in Class 10 . The balance in this class is $7,423. The cost of each asset in the class was $7,500. On June 30, 2011, one of the

Determine the maximum cca , Lambda Ventures, an unincorporated business, ha...

Lambda Ventures, an unincorporated business, has a class 10 UCC balance on January 1, 2010 of $453,000.During 2010, it acquires additional Class 10 assets at a cost of $63,200.Also

Calculate the tax, Sue, Scarlett and Sally are in a partnership together pr...

Sue, Scarlett and Sally are in a partnership together providing accounting services.  The partnership uses the cash basis to account for income tax.  Under the partnership agreemen

Explain the characteristics of an efficient tax system, Question 1: (a)...

Question 1: (a) Why does Government intervene in the market's allocation of resources even if the economy is Pareto efficient? (b) What are the principal reasons why marke

Determine the efficient quantity of fertilizer, The above figure shows the ...

The above figure shows the market for fertilizer. When fertilizer is applied to lawns, it runs off into neighboring streams and ponds, killing fish and creating an external cost.

RESIDENCE ND SOURCE, FOR THE RELEVANT INCOME YEAR, EILL STANNOS BE REGARDED...

FOR THE RELEVANT INCOME YEAR, EILL STANNOS BE REGARDED AS A RESIDENT OR NON- RESIDENT

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