Question
During 2020, Noah and Steph (who are married, file a joint return and have no dependents) have the following financial information and would like you
During 2020, Noah and Steph (who are married, file a joint return and have no dependents) have the following financial information and would like you to determine their taxable income. A review of their records reveal the following. Note that Steph works and generates all of the family income. Noah does not work and earns no income.
Selected Items of Income: Guaranteed payment from Osprey LLP
100,000
Passthrough of income from Osprey LLP
275,000
Distribution from Osprey LLP
150,000
Interest income-Bank of America
5,000
Dividend income from various investments
25,000
Inheritance received from father's estate
1,000,000
Total
1,555,000
Selected Cash Expenditures: Gambling losses
2,000 Mortgage interest on primary residence - loan balance is $500,000 18,000
Mortgage interest on vacation home - loan balance is $200,000
10,000
Real estate taxes on primary residence
12,000
Real estate taxes on vacation home
5,000
Interest expense on a personal car loan
3,000
State income taxes paid
20,000
Charitable contributions
50,000
Self-employment tax
22,468
Purchase of another second vacation home in Naples, Florida
750,000
Total
892,468
Compute Noah and Stephs taxable income for 2020. Ignore any potential QBI deduction.
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