Chapter 12 PROBLEM EXAM. Please review the below and on a separate piece of paper make all calculations, ready to present to Mr. Trump. Problem is worth 50 points, and is part of your final grade.

FACTS -

Ronald Chump is the brother of Donald Trump. To keep under the radar of the public eye, Ronald changed his name from Trump to Chump.

Anyway, Ronnie in nowhere near as wealthy as his brother. Thus, Don gave Ron a $20,000 gift each year since 2018, to thank him for being there during Donnies campaign. Of course, Ron also handed out flyers, dropped in on Dons NJ Campaign Headquarters all the time to rally the troops, and he even gave his brother some advice about spying on Joe Biden in 2019 and 2020. Ronnie likes the money, and really believes he is Donnies #1 advisor, even more than Rudy G, the former mayor of NY City! Anyway, the $20,000 Ronnie got in 2019 sure was sweetbut because he feels like he really did a lot of work to help Donnie he certainly should have been paid he was entitled to this little extra pay (ola?)!!! I suggest we take the conservative approach and tell Ronnie that this $20,000 WILL BE included in his taxable income just to be safe! We dont want his big brother The President to be embarrassed.

Ron works; is married; has kids little and big ones; some his wife gave birth to (boy, 20 and girl, 21) and some just adopted (two cuties from Russia, a boy and a girl, twins, aged 2). It cost the Chumps $24,000 in TOTAL adoption fees, and the adoption was completed in 2019. He is paying for his oldest girls a junior - tuition and room and board. The 20 year old boy is a freshman at University of Penn, just like Dad.

Last year 2019 - his big brother Donald J. hired him for 3 months and sent him to Iran to oversee Trumps golf course development. Ronnie is writing a book on his work with golf club development and has incurred about $5,000 in costs thus far for literature research costs (paid some Iranian library/thinktank) in this book writing endeavor. In Iran his earnings over the 3 months were $50,000, subject to tax in Iran at rate of 10%, so he paid $5,000 in tax to Iran.

In addition to the money he made while working in Iran, he also earned $50,000 over the other nine months while he was home, working along the Camden riverfront, driving a tug boat.

Ronnie has a side development business and has been rehabbing one certified historic property near his home in Newark NJ. He also has another old property he is fixing up, which was originally built in 1876. So he has two properties he has rehabbed. He paid $50.000 for each property and is cost him $100,000 to rehab each of the properties. All done during June 2019but he wont take any depreciation until 2020 on these properties his tenants moved in on 12/31/2019.sweet!

Chump hired a couple of guys US citizens who had been born in Mexico, prior to the wall being built by big brother Donnie to do carpentry and other work on his properties. He paid these guys $8,000 each in 2019he loved the work these guys did and thought it was cool that they had learned to be carpenters while they were in prison (both felons were discharged from prison in early 2019 and they each worked 500 hours during 2019 and were paid $16 per hour.good gig!).

He knows he should save so he made $3,000 of contributions to traditional IRA and she makes a $3,000 contribution to a Roth IRA. Did this in December 2019.

His wife, Olania, is a full time college student. To allow her to free up time to hit the books the Chumps use child care and pay $1,000 per month to watch their lovely adopted 2 year old children, beginning on September 1, 2019. Their 21 year old daughter, Ovanka, is a college junior and tuition for the girl is $20,000 annually. She is full time, all 2019. Her room and board costs run $1,000 per month. Olania has tuition cost of $12,000 annually, but she lives at home. Both she and her daughter are first year in the undergraduate program at Rutgers Camden (they plan to later transfer to Penns Wharton school). Oh, the tuition for the boy Ronnie Jr - is $60,000 per year. Freshman dorm cost $2,000 per month, starting in August 2019. Books the kids borrowed from Uncle Donnie, so no cost there!

ISSUE HE NEEDS YOUR HELP -

Ronnie, like his brother Donnie, does not want you to see his old tax returns, but he has come to you for help. He wants you to identify any and all tax credits he can take. He says I recognize that I need to have good advisors so thats why I came to you!

Assume his US tax rate is 30%. Assume he takes the standard deduction.

YOUR ASSIGNMENT

1. Identify what credits Ronnie might be eligible for, based on the facts he provided.
2. Determine the amount of each credit.
3. Show all your calculations so that Ronnie can see what you have done. Note that he is very sensitive to the need that this all be done correctly. He does not want to embarrass his brother if his (Ronnies) tax return is selected for audit! Additionally, even if he is eligible for the Earned Income Credit he thinks he may not claim this, because it might look bad politically to his family. So he tells you to ignore that credit, for now, until he checks with his brother, Donald.
4. Assume no minimum tax will exist.
5. Whats his 2019 tax, after credits?