Question
Accountancy 503 Fall 2020Daily 7 Problem 1 Fareh is not married and supports her 12 year old child who lives with her.Fareh works as an
Accountancy 503 Fall 2020Daily 7
Problem 1
Fareh is not married and supports her 12 year old child who lives with her.Fareh works as an employee with gross salaries and wages of $122,000.Fareh's only other income was interest of $7,300, qualifying dividends of $3,150, and other information follows:
Contribution to solo(k) retirement plan, withheld from the salary$ 4,500
Loss on sale of Alphatech stock held 2 years-3,700
Mortgage interest on primary residence4,950
State and local property tax on residence3,350
Property tax included in personal auto registration160
State sales taxes paid370
State income taxes paid 1,800
Charitable contributions of cash1,750
Political contributions550
All information is for 2020.
Calculate Fareh's adjusted gross income, taxable income, and gross tax.Show your work!
Problem 2
Jose has adjusted gross income of $110,000 from all sources except the following:
Net income from a limited interest in Aztec Partnership-$2,000
Net loss from a rent house-$22,000
Includable interest income 5,000
How much is Jose's adjusted gross income?Show your work.
Problem 3
Henry, a single taxpayer with a marginal tax rate of 35 percent(taxable income is $300,000 before considering any of the items below), sold the following assets during the year:
AssetSale PriceTax BasisGain/LossHolding Period
ABC Stock$50,000$25,000$25,000More than One Year
XYZ Stock$12,000$9,000$3,000Less than One Year
Stamp Collection$10,000$5,000$5,000More than One Year
RST Stock$13,000$19,000$(6,000)Less than One Year
Rental Home$100,000$50,000*$50,000More than One Year
*$25,000 of the gain is a 25 percent gain. The remaining gain is 0/15/20 percent gain.
What tax rate(s) will apply to each of Henry's capital gains or losses?
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