Question
Demarco and Janine Jackson have been married for 20 years and have four children (no children under age 6 at year-end) who qualify as their
Demarco and Janine Jackson have been married for 20 years and have four children (no children under age 6 at year-end) who qualify as their dependents (Damarcus, Jasmine, Michael, and Candice). The couple received salary income of $100,600 and qualified business income of $10,000 from an investment in a partnership, and they sold their home this year. They initially purchased the home three years ago for $212,000 and they sold it for $280,000. The gain on the sale qualified for the exclusion from the sale of a principal residence. The Jacksons incurred $17,100 of itemized deductions (no charitable contributions), and they had $1,000 withheld from their paychecks for federal taxes. They are also allowed to claim a child tax credit for each of their children. However, because Candice was 18 years of age at year end, the Jacksons may claim a child tax credit for other qualifying dependents for Candice.
c. What would their taxable income be if their itemized deductions totaled $29,200 instead of $17,100?
| Description | Amount | ||
| (1) | Gross income | ||
| (2) | For AGI deductions | ||
| (3) | Adjusted gross income | ||
| (4) | Standard deduction | ||
| (5) | Itemized deductions | ||
| (6) | |||
| (7) | Deduction for qualified business income | ||
| (8) | Total Deduction from AGI | ||
| (9) | Taxable income | ||
d. What would their taxable income be if they had $0 itemized deductions and $6,600 of for AGI deductions?
| Description | Amount | ||
| (1) | Gross income | ||
| (2) | For AGI deductions | ||
| (3) | Adjusted gross income | ||
| (4) | Standard deduction | ||
| (5) | Itemized deductions | ||
| (6) | |||
| (7) | Deduction for qualified business income | ||
| (8) | Total Deduction from AGI | ||
| (9) | Taxable income | ||
e. Assume the original facts but now suppose the Jacksons also incurred a loss of $5,600 on the sale of some of their investment assets. What effect does the $5,600 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?
| taxable income |
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Managerial Accounting Creating Value In A Dynamic Business Environment
Authors: Ronald Hilton, David Platt
13th Edition
1264100698, 9781264100699
