Compute AGI

Compute Total itemized deductions - showing all work of how much each is deductible

Compute tax liability - ignore self-employment tax and alternative minimum tax

25. [14 points) Blake and Gwen (ages 42 and 44) are married, file a joint return, and have two dependent children ages 11 and 4 that live with them. They also have two pet dogs that live with them; an adult dog and a puppy. Blake works in an office as a District Manager of a large corporation, while Gwen owns a business as a sole proprietor. Gwen's business net income for 2020 is $40,000. Neither Blake nor Gwen is an active participant in a qualified retirement plan. During 2020, they received the following cash receipts: Blake's salary $ 166,600 Loan received from Blake's brother-in-law 6,000 Child support payments received from Gwen's first spouse for the oldest child 7,000 Gambling winnings from trips to race tracks and casinos 8,000 Sale of a personal automobile on 2/1/2020 (originally purchased on 7/1/2016 for $21,500) 9,000 Sale of ABC stock on 3/1/2020 (originally purchased on 3/1/2017 for $8.600) 10,000 Sale of DEF stock on 9/1/2020 (originally purchased on 11/1/2018 for $15,000) 11,000 Interest from investments in corporate bonds 12,000 Interest from a state of Pennsylvania bond 13,000 Inheritance from Gwen's deceased uncle 14.000 In addition, Blake and Gwen paid the following during 2020: Payments made to a contractor to redo the kitchen in the home 24,700 Qualified medical expenses 22,700 Property taxes on personal residence 4,700 Total sales taxes 5,700 State and local income taxes 6,700 Purchase of new personal automobile 25,700 Interest on personal automobile loan 7,700 Interest on loan used to purchase investment property 8,700 Mortgage loan interest on primary residence outstanding principal = $300,000) 9,700 Cost of hotel accommodations for gambling trips to Atlantic City 1,700 Gambling losses 14,700 Child support paid to Blake's first spouse, whom he divorced on 7/4/2015 16,700 Alimony paid to Blake's first spouse, whom he divorced on 7/4/2015 18.700 Contributions to a traditional IRA (retirement account) 5,300 Payment to a breeder to purchase the puppy 300 Gwen made a donation of LTCG property to a qualified private nonoperating foundation: FMV = 50,000 Blake and Gwen had a personal casualty loss--not covered by insurance--in a federally declared disaster area (amount determined after subtracting $100 floor) 23,000 Required Compute Blake and Gwen's adjusted gross income (AGI) using the individual income tax formula. Using good form, show which items, and how much of each item are included in gross income and are deducted for AGI. Show your calculations using good form. Ignore both self-employment tax and alternative minimum tax (if applicable). Note: 25. [14 points) Blake and Gwen (ages 42 and 44) are married, file a joint return, and have two dependent children ages 11 and 4 that live with them. They also have two pet dogs that live with them; an adult dog and a puppy. Blake works in an office as a District Manager of a large corporation, while Gwen owns a business as a sole proprietor. Gwen's business net income for 2020 is $40,000. Neither Blake nor Gwen is an active participant in a qualified retirement plan. During 2020, they received the following cash receipts: Blake's salary $ 166,600 Loan received from Blake's brother-in-law 6,000 Child support payments received from Gwen's first spouse for the oldest child 7,000 Gambling winnings from trips to race tracks and casinos 8,000 Sale of a personal automobile on 2/1/2020 (originally purchased on 7/1/2016 for $21,500) 9,000 Sale of ABC stock on 3/1/2020 (originally purchased on 3/1/2017 for $8.600) 10,000 Sale of DEF stock on 9/1/2020 (originally purchased on 11/1/2018 for $15,000) 11,000 Interest from investments in corporate bonds 12,000 Interest from a state of Pennsylvania bond 13,000 Inheritance from Gwen's deceased uncle 14.000 In addition, Blake and Gwen paid the following during 2020: Payments made to a contractor to redo the kitchen in the home 24,700 Qualified medical expenses 22,700 Property taxes on personal residence 4,700 Total sales taxes 5,700 State and local income taxes 6,700 Purchase of new personal automobile 25,700 Interest on personal automobile loan 7,700 Interest on loan used to purchase investment property 8,700 Mortgage loan interest on primary residence outstanding principal = $300,000) 9,700 Cost of hotel accommodations for gambling trips to Atlantic City 1,700 Gambling losses 14,700 Child support paid to Blake's first spouse, whom he divorced on 7/4/2015 16,700 Alimony paid to Blake's first spouse, whom he divorced on 7/4/2015 18.700 Contributions to a traditional IRA (retirement account) 5,300 Payment to a breeder to purchase the puppy 300 Gwen made a donation of LTCG property to a qualified private nonoperating foundation: FMV = 50,000 Blake and Gwen had a personal casualty loss--not covered by insurance--in a federally declared disaster area (amount determined after subtracting $100 floor) 23,000 Required Compute Blake and Gwen's adjusted gross income (AGI) using the individual income tax formula. Using good form, show which items, and how much of each item are included in gross income and are deducted for AGI. Show your calculations using good form. Ignore both self-employment tax and alternative minimum tax (if applicable)