3. Meredith Grey and Derek Shepherd had a lot going on in 2019. Working as doctors at Seattle Grace Hospital, the married couple earned $231,000 each in salary. The only other person in their household is one, adopted daughter, Zola Grey Shepherd, age 8. At the beginning of the year, Meredith's mother Ellis Grey passed away. From this, Meredith received $250,000 in inheritance and $100,000 from a lump sum payment of life insurance proceeds. Meredith made two different investments with the inheritance and life insurance proceeds. She invested $150,000 of the total $350,000 above in a portfolio of stocks and bonds (none of which were municipal bonds) to save for her and Derek's future retirement. The portfolio of stocks and bonds increases in value by $15,000 over the year but Meredith and Derrick do not sell any of these investments during the year. Finally, Derek and Meredith received an award worth $25,000 based on medical research they had done during the year. They kept the award money (did not donate it) and used it in 2019 for personal expenditures. It required no additional service. At the end of the year, assume that Derek and Meredith did not have any itemized deductions, credits, or prepayments for the year. Based on the above information, determine the following: a. What was the amount of realizable income for Meredith and Derek in 2019? b. What will be included in Meredith and Derek's gross income for 2019 (i.e. what amount is recognizable)? c. What is the best filing status Derrick and Meredith can use? d. Regardless of your answer in a. C., assume that Meredith and Derek's total gross income for 2019 is $428,000 and they used Married filing jointly as their filing status. Use the individual tax formula and the appropriate Federal Tax Schedule and other values in Appendix D to calculate Meredith and Derek's 2019 tax due at the end of the year. 2019 Tax Rate Schedules Individuals Schedule X-Single Schedule Z-Head of Household If taxable income is over: But not over: If taxable income is over: But not over: The tax is: The tax is: $ $ 0 9,700 $ 9,700 $ 39,475 $ 0 $ 13,850 $ 13,850 $ 52,850 $ 39,475 $ 84,200 $ 52,850 $ 84,200 $ 84,200 $160,725 $ 84,200 $160,700 10% of taxable income $970 plus 12% of the excess over $9,700 $4,543 plus 22% of the excess over $39,475 $14,382.50 plus 24% of the excess over $84,200 $32,748.50 plus 32% of the excess over $160,725 $46,628.50 plus 35% of the excess over $204,100 $153,798.50 plus 37% of the excess over $510,300 10% of taxable income $1,385 plus 12% of the excess over $13,850 $6,065 plus 22% of the excess over $52,850 $12,962 plus 24% of the excess over $84,200 $31,322 plus 32% of the excess over $160,700 $45,210 plus 35% of the excess over $204,100 $152,380 plus 37% of the excess over $510,300 $160,725 $204,100 $160,700 $204,100 $204,100 $510,300 $204,100 $510,300 $510,300 - $510,300 Schedule Y-1-Married Filing Jointly or Qualifying Widow(er) Schedule Y-2-Married Filing Separately If taxable income is over: If taxable income is over: But not over: The tax is: But not over: The tax is: $ $ 0 9,700 $ 9,700 $ 39,475 $ 0 $ 19,400 $ 19,400 $ 78,950 $ 39,475 $ 84,200 $ 78,950 $168,400 $ 84,200 $160,725 $168,400 $321,450 10% of taxable income $1,940 plus 12% of the excess over $19,400 $9,086 plus 22% of the excess over $78,950 $28,765 plus 24% of the excess over $168,400 $65,497 plus 32% of the excess over $321,450 $93,257 plus 35% of the excess over $408,200 $164,709.50 plus 37% of the excess over $612,350 10% of taxable income $970 plus 12% of the excess over $9,700 $4,543 plus 22% of the excess over $39,475 $14,382.50 plus 24% of the excess over $84,200 $32,748.50 plus 32% of the excess over $160,725 $46,628.50 plus 35% of the excess over $204,100 $82,354.75 plus 37% of the excess over $306,175 $160,725 $204,100 $321,450 $408,200 $204,100 $306,175 $408,200 $612,350 $306,175 $612,350 - 3. Meredith Grey and Derek Shepherd had a lot going on in 2019. Working as doctors at Seattle Grace Hospital, the married couple earned $231,000 each in salary. The only other person in their household is one, adopted daughter, Zola Grey Shepherd, age 8. At the beginning of the year, Meredith's mother Ellis Grey passed away. From this, Meredith received $250,000 in inheritance and $100,000 from a lump sum payment of life insurance proceeds. Meredith made two different investments with the inheritance and life insurance proceeds. She invested $150,000 of the total $350,000 above in a portfolio of stocks and bonds (none of which were municipal bonds) to save for her and Derek's future retirement. The portfolio of stocks and bonds increases in value by $15,000 over the year but Meredith and Derrick do not sell any of these investments during the year. Finally, Derek and Meredith received an award worth $25,000 based on medical research they had done during the year. They kept the award money (did not donate it) and used it in 2019 for personal expenditures. It required no additional service. At the end of the year, assume that Derek and Meredith did not have any itemized deductions, credits, or prepayments for the year. Based on the above information, determine the following: a. What was the amount of realizable income for Meredith and Derek in 2019? b. What will be included in Meredith and Derek's gross income for 2019 (i.e. what amount is recognizable)? c. What is the best filing status Derrick and Meredith can use? d. Regardless of your answer in a. C., assume that Meredith and Derek's total gross income for 2019 is $428,000 and they used Married filing jointly as their filing status. Use the individual tax formula and the appropriate Federal Tax Schedule and other values in Appendix D to calculate Meredith and Derek's 2019 tax due at the end of the year. 2019 Tax Rate Schedules Individuals Schedule X-Single Schedule Z-Head of Household If taxable income is over: But not over: If taxable income is over: But not over: The tax is: The tax is: $ $ 0 9,700 $ 9,700 $ 39,475 $ 0 $ 13,850 $ 13,850 $ 52,850 $ 39,475 $ 84,200 $ 52,850 $ 84,200 $ 84,200 $160,725 $ 84,200 $160,700 10% of taxable income $970 plus 12% of the excess over $9,700 $4,543 plus 22% of the excess over $39,475 $14,382.50 plus 24% of the excess over $84,200 $32,748.50 plus 32% of the excess over $160,725 $46,628.50 plus 35% of the excess over $204,100 $153,798.50 plus 37% of the excess over $510,300 10% of taxable income $1,385 plus 12% of the excess over $13,850 $6,065 plus 22% of the excess over $52,850 $12,962 plus 24% of the excess over $84,200 $31,322 plus 32% of the excess over $160,700 $45,210 plus 35% of the excess over $204,100 $152,380 plus 37% of the excess over $510,300 $160,725 $204,100 $160,700 $204,100 $204,100 $510,300 $204,100 $510,300 $510,300 - $510,300 Schedule Y-1-Married Filing Jointly or Qualifying Widow(er) Schedule Y-2-Married Filing Separately If taxable income is over: If taxable income is over: But not over: The tax is: But not over: The tax is: $ $ 0 9,700 $ 9,700 $ 39,475 $ 0 $ 19,400 $ 19,400 $ 78,950 $ 39,475 $ 84,200 $ 78,950 $168,400 $ 84,200 $160,725 $168,400 $321,450 10% of taxable income $1,940 plus 12% of the excess over $19,400 $9,086 plus 22% of the excess over $78,950 $28,765 plus 24% of the excess over $168,400 $65,497 plus 32% of the excess over $321,450 $93,257 plus 35% of the excess over $408,200 $164,709.50 plus 37% of the excess over $612,350 10% of taxable income $970 plus 12% of the excess over $9,700 $4,543 plus 22% of the excess over $39,475 $14,382.50 plus 24% of the excess over $84,200 $32,748.50 plus 32% of the excess over $160,725 $46,628.50 plus 35% of the excess over $204,100 $82,354.75 plus 37% of the excess over $306,175 $160,725 $204,100 $321,450 $408,200 $204,100 $306,175 $408,200 $612,350 $306,175 $612,350