1 59. Martin S. Albert (Social Security number 111-11-1111) is 39 years old and is married to Michele R. Albert (Social Security number 123-45-6789). The Alberts live at 512 Ferry Road, Newport News, VA 23601. They file a joint return and have two dependent children, Charlene, age 17, and Jordan, age 18. Charlene's Social Security number is 123-45-6788, and Jordan's Social Security number is 123-45-6787. In 2019, Martin and Michele had the following transactions: a. Martin received $120,000 in salary from Red Steel Corporation, where he is a con- struction engineer. Withholding for Federal income tax was $10,750. The amounts withheld for FICA taxes were as follows: $7,049 ($113,700 X 6.2%) for Social Security and $1,740 ($120,000 X 1.45% for Medicare. Martin worked in Mexico from January 1, 2018, until February 15, 2019. His $120,000 salary for 2019 includes $18,000 he earned for January and one-half of February 2019 while working in Mexico. CHAPTER 5 Gross income. Exclusions b. Martin and Michele received $400 interest on Montgomery County (Virginia) school bonds. c. Martin received $2,300 interest from a Bahamian bank account. d. Michele received 50 shares of Applegate Corporation common stock as a stock dividend. The shares had a fair market value of $2,500 at the time Michele received them, and she did not have the option of receiving cash. e. Martin and Michele received a $1,200 refund on their 2018 Virginia income taxes. Their itemized deductions in 2018 totaled $34,000. f. Martin paid $6,600 alimony to his former wife, Rose T. Morgan (Social Security number 123-45-6786). The divorce was finalized in 2016. g. Martin and Michele kept the receipts for their sales taxes paid of $1,100. h. Martin and Michele's itemized deductions were as follows: State income tax paid and withheld totaled $5,100. Real estate taxes on their principal residence were $3,700. Mortgage interest on their principal residence was $2,500. Cash contributions to the church totaled $2,800. Part 1-Tax Computation Compute the Alberts' net tax payable (or refund due) for 2019. Part 2 Tax Planning The Alberts are considering buying another house. Their house mortgage payments would increase by $500 (to $1,500 per month, which includes a $250 increase in interest and a $100 increase in property tax. The Alberts would like to know how much the mortgage payments would increase net of any change in their income tax. Write a letter to the Alberts that contains your advice. 1 59. Martin S. Albert (Social Security number 111-11-1111) is 39 years old and is married to Michele R. Albert (Social Security number 123-45-6789). The Alberts live at 512 Ferry Road, Newport News, VA 23601. They file a joint return and have two dependent children, Charlene, age 17, and Jordan, age 18. Charlene's Social Security number is 123-45-6788, and Jordan's Social Security number is 123-45-6787. In 2019, Martin and Michele had the following transactions: a. Martin received $120,000 in salary from Red Steel Corporation, where he is a con- struction engineer. Withholding for Federal income tax was $10,750. The amounts withheld for FICA taxes were as follows: $7,049 ($113,700 X 6.2%) for Social Security and $1,740 ($120,000 X 1.45% for Medicare. Martin worked in Mexico from January 1, 2018, until February 15, 2019. His $120,000 salary for 2019 includes $18,000 he earned for January and one-half of February 2019 while working in Mexico. CHAPTER 5 Gross income. Exclusions b. Martin and Michele received $400 interest on Montgomery County (Virginia) school bonds. c. Martin received $2,300 interest from a Bahamian bank account. d. Michele received 50 shares of Applegate Corporation common stock as a stock dividend. The shares had a fair market value of $2,500 at the time Michele received them, and she did not have the option of receiving cash. e. Martin and Michele received a $1,200 refund on their 2018 Virginia income taxes. Their itemized deductions in 2018 totaled $34,000. f. Martin paid $6,600 alimony to his former wife, Rose T. Morgan (Social Security number 123-45-6786). The divorce was finalized in 2016. g. Martin and Michele kept the receipts for their sales taxes paid of $1,100. h. Martin and Michele's itemized deductions were as follows: State income tax paid and withheld totaled $5,100. Real estate taxes on their principal residence were $3,700. Mortgage interest on their principal residence was $2,500. Cash contributions to the church totaled $2,800. Part 1-Tax Computation Compute the Alberts' net tax payable (or refund due) for 2019. Part 2 Tax Planning The Alberts are considering buying another house. Their house mortgage payments would increase by $500 (to $1,500 per month, which includes a $250 increase in interest and a $100 increase in property tax. The Alberts would like to know how much the mortgage payments would increase net of any change in their income tax. Write a letter to the Alberts that contains your advice