ACCT 3307 Income Tax Accounting

Facts:

Lucy and Richard Smith are a married and have one dependent child, Miu who is 5 years old. The Smiths live in Texas where there is no state income tax, and all are U.S. citizens.

Financial Information

• Richard Salary as a marketing executive $395,000 (Medicare withheld at 1.45%)
• Lucys Salary as a merchandising consultant $222,000 (Medicare withheld at 1.45%)
• Unemployment Compensation $8,000
• Interest Income from corporate bonds $16,000
• Interest Income from Wells Fargo CDs $5,250
• Interest Income from State of Texas Bonds $5,500
• Scholarship for Lucy (educational expenses = $6,325) $7,500 (Lucy went back to school)
• Inheritance from Grandmother $550,000
• Gift from uncle $175,000
• Annuity Payments (investment=$30K, payout=120K) $36,000
• Long-term capital gains $32,000
• Dividends from Microsoft (Qualifying) $18,350
• Roth IRA contribution for Richard $5,000
• Roth IRA contribution for Lucy $5,000
• Mortgage Interest Principal ($1,500,000) $72,000 (Mortgage origination 2018)
• Charitable Contributions to St. Ludmilas Church $42,200
• Noncash charitable contribution to Cancer Society $4,500
• Un-reimbursed payments to medical doctors $67,500 (Richard is fighting cancer)
• Payments for non-prescriptions drugs (aspirin, allergy) $3,250
• Investment interest expense $62,250
• Non-cash contribution of clothing to goodwill $4,000
• Real Estate Taxes residence $18,250
• Federal Income tax withholding $150,000

Questions

Please prepare the case study using Excel

1. What is the Smiths gross income for 2019?
2. What is the Smiths adjusted gross income for 2019?
3. What is the Smiths itemized deductions for 2019?
4. What is the Smiths taxable income for 2019?
5. What is the Smiths tax liability for 2019?
6. What is the Smiths refund or tax due for 2019?