Comprehensive Problem 4-55 (LO 4-1, LO 4-2, LO 4-3)

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Demarco and Janine Jackson have been married for 20 years and have four children who qualify as their dependents (Damarcus, Janine, Michael, and Candice).The couple received salary income of $150,000, qualified business income of $22,500from an investment in a partnership, and they sold their home this year. They initially purchased the home three years ago for $262,500 and they sold it for $312,500.The gain on the sale qualified for the exclusion from the sale of a principal residence.The Jacksons incurred $19,000 of itemized deductions, and they had $4,800withheld from their paychecks for federal taxes. They are also allowed to claim a child tax credit for each of their children. However, because Candice is 18 years of age, the Jacksons may claim a child tax credit for other qualifying dependents for Candice. (Use thetax rate schedules.)

rev: 09_17_2018_QC_CS-138648

Comprehensive Problem 4-55 Parts-c through f

c.What would their taxable income be if their itemized deductions totaled $30,500 instead of $19,000?

d.What would their taxable income be if they had $0 itemized deductions and $11,000 of for AGI deductions?

e.Assume the original facts but now suppose the Jacksons also incurred a loss of $6,250 on the sale of some of their investment assets. What effect does the $6,250 loss have on their taxable income?

f.Assume the original facts but now suppose the Jacksons own investments that appreciated by $10,000 during the year. The Jacksons believe the investments will continue to appreciate, so they did not sell the investments during this year. What is the Jacksons' taxable income?