Complete Problem PR 2-1, Problem PR 2-2, and Problem PR 2-3 using the Module 02 Excel Templates.

In some problems you may be asked to offer a brief explanation based on a real-world scenario. Text boxes are available for you to enter your answers. Other problem will require you to prepare accounting schedules, which you can do in the gray areas of the spreadsheet.

Tax Formula for Individuals Income from whatever source derived: $ Total income - Minus: Exclusions - - Gross Income Minus: Deductions for adjusted gross income (AGI) $ - - Adjusted gross income (AGI) Minus: Deductions from adjusted gross income (AGI) $ - Taxable income - Gross income tax (Use current year tax table) - Minus: Payments Net income tax payable or (refund due): $ - The following information relates to two married couples: Lanes Salary (earned by one spouse) Interest Income Deductible IRA Contributions Itemized deductions Exemptions Withholding $ 32,000 $ 1,000 5,000 15,000 7,800 700 Waynes 115,000 10,000 15,000 7,800 18,700 Required: Compute the current year tax due or refund due for each couple using the Tax Formula for Individuals. Assume that the itemized deductions have been reduced by the applicable floors. Ignore credits. Solution Tax Formula for Individuals: Lanes Solution Tax Formula for Individuals: Waynes Anna, age 65, who lives with her unmarried son, Mario, received $7,000, which was used for her support during the year. The sources of support were as follows: Social security benefits Mario Caroline, an unrelated friend Doug, Anna's son Elaine, Anna's sister Total $ $ 1,500 2,600 800 500 1,600 7,000 Required: a. Who is eligible to claim Anna as a dependent? b. What must be done before Mario can claim the exemption? c. Can Mario claim an old age allowance for this mother? Explain. Solution The following information relates to Tom, a single taxpayer, age 18: Salary Interest Income Itemized deductions $ 1,800 1,600 600 Required: a. Compute Tom's taxable income assuming he is self-supporting. Use the Tax Formula for Individuals. b. Compute Tom's taxable income assuming he is a dependent of his parents. Solution Tax Formula for Individuals: Tom - Self-Supporting Note: Because the total of the Standard Deduction and Note: Because the total of the Standard Deduction and Personal Exemption is greater than AGI, there is no taxable income. Show Taxable Income as $0. Solution Tax Formula for Individuals: Tom - Dependent Note: Because Tom is a dependent on his paren return, his standard ded is limited to his earned ($1,800 Salary) plus $30 Note: Because Tom is a dependent on his parent's tax return, he is not able to use the personal exemption. Note: Because Tom is a is a dependent on his parent's tax return, his standard deduction is limited to his earned income ($1,800 Salary) plus $300. Note: Because Tom is a dependent on his parent's tax return, he is not able to use the personal exemption