Federal Income Tax Questions

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Problem 5-2 Self-Employed Health Insurance Deduction (LO 5.2) Serena is a 38-year-old single taxpayer. She operates a small business on the side as a sole proprietorship. Her 2019 Schedule C reports net profits of $15,624. Her employer does not offer health insurance. Serena pays health insurance premiums of $7,545 in 2019. Serena also pays long-term care insurance premiums of $600 in 2019. Calculate Serena's self-employed health care deduction.Problem 5-3 Individual Retirement Accounts (L0 5.3) Karen, 28 years old and a single taxpayer, has a salary of $33,000 and rental income of $33,000 for the 2019 calendar tax year. Karen is covered by a pension through her employer. AGI phase-out range for traditional IRA contributions for a single taxpayer who is an active plan participant is $64,000 $74,000. a. What is the maximum amount that Karen may deduct for contributions to her traditional IRA for 2019? $[:1 b. If Karen is a calendar year taxpayer and les her tax return on August 15, what is the last date on which she can make her contribution to the IRA and deduct it for 2019? Problem 5-5 Individual Retirement Accounts (LO 5.3) What is the maximum amount a 45-year-old taxpayer and 45-year-old spouse can put into a Traditional or Roth IRA for 2019 (assuming they have sufficient earned income, but do not have an income limitation and are not covered by another pension plan)? $Problem 5-6 Individual Retirement Accounts (L0 5.3) What is the maximum amount a 55-year-old taxpayer and 52year-old spouse can put into a Traditional or Roth IRA for 2019, assuming they earn $70,000 in total and are not participants in pension plans? 55:] Problem 5-7 Individual Retirement Accounts (LO 5.3) Barry is a single, 40-year-old software engineer earning $190,000 a year and is not covered by a pension plan at work. How much can he put into a Roth IRA?Problem 5-9 Individual Retirement Accounts (L0 5.3) Dori is 58 years old and retired in 2019. She receives a pension of $25,000 a year and no other income. She wishes to put the maximum allowed into an IRA. How much can she contribute to her IRA? w Problem 5-11 Employee Pensions (L0 5.4) Tony is a 45-year-old selfemployed psychiatrist who has net earned income of $300,000 in 2019. What is the maximum amount he can contribute to his SEP for the year? Q Problem 5-12 Simplified Employee Pensions (LO 5.4) Anthony, a self-employed plumber, makes a maximum contribution to a SEP for his employee, Debra. Debra's compensation is $50,000 for the year. How much is he allowed to contribute to the plan for Debra? $Problem 5-16 Medical Expenses (L0 5.6) Janet needs an elevator seat attached to her stairs since she has a medical condition that makes her unable to climb the stairs in her house. The $10,000 spent on the elevator seat does not increase the value of her house according to a local appraiser. How much of the capital asset is deductible in Janet's tax return as a medical expense? E is deductible in the current year as an expense before the AG] limitation. Problem 5-22 (Algorithmic) Interest (L0 5.8) Matthew borrows $112,500 to invest in bonds. During the current year, his interest on the loan is $11,250. Matthew's taxable interest income from the bonds is $6,750. This is Matthew's only investment income. 3. Calculate Matthew's itemized deduction for investment interest expense for this year. sl:l b. Is Matthew entitled to a deduction (related to the investment interest expense) in future years? \Problem 5-24 Interest (L0 5.8) Janet and James purchased their personal residence 15 years ago for $300,000. For the current year, they have an $80,000 rst mortgage on their home, on which they paid $5,750 in interest. They also have a home equity loan to pay for the children's college tuition secured by their home with a balance throughout the year of $150,000. They paid interest on the home equity loan of $9,000 for the year. Calculate the amount of their deduction for interest paid on qualified residence acquisition debt and qualified home equity debt for the current year. If your answer is zero, enter "0". a. Qualified residence acquisition debt interest $:] b. Qualified home equity debt interest Problem 5-25 Interest (L0 5.8) Helen paid the following amounts of interest during the 2019 tax year: Mortgage interest on Dallas residence (loan balance $50,000) Automobile loan interest (personal use only) Mortgage interest on Vail residence (loan balance $50,000) Visa and Mastercard interest Calculate the amount of Helen's itemized deduction for interest (after limitations) for 2019. 54:] Problem 5-27 Contributions (L0 5.9) Barbara donates a painting that she purchased three years ago for $8,000, to a university for display in the president's ofce. The fair market value of the painting on the date of the gift is $14,000. If Barbara had sold the painting, the difference between the sales price and her cost would have been a long-term capital gain. How much is Barbara's charitable contribution deduction for this donation? E is deductible because the painting i \" put to a use directly related to the organization's primary purpose. Problem 5-29 Contributions (L0 5.9) Richard donates publicly traded Gold Company stock with a basis of $1,000 and a fair market value of $15,000 to the college he attended, which is considered a public charity. Richard has owned the shares for 10 years. How is this contribution treated on Richard's tax return? Assuming his adjusted gross income is at least $50,000, Richard can to deduct E on his' VI. However, Richard may elect to use the 50 percent AGI limitation and deduct E. Problem 5-33 Miscellaneous Deductions (LO 5.10) During the 2019 tax year, Irma incurred the following expenses: Union dues Tax return preparation fee Brokerage fees for the purchase of stocks Uniform expense not reimbursed by her employer If Irma's adjusted gross income is $23,000, calculate her miscellaneous deductions. I W Problem 5-1 Health Savings Accounts (LO 5.1) Evan participates in an HSA carrying family coverage for himself, his spouse, and two children. In 2019, Evan has $100 per month deducted from his paycheck and contributed to the HSA. In addition, Evan makes a one-time contribution of $2,000 on April 15, 2020 when he files his tax return. Evan also receives a 2019 Form 1099-SA that reports distributions to Evan of $3,200 which Evan used for medical expenses. Compute the effect of the HSA transactions on Evan's adjusted gross income. These transactions Evan's AGI by $Problem 5-31 Casualty and Theft Losses (L0 5.10) On January 3, 2019, Carey discovers his diamond bracelet has been stolen. The bracelet had a fair market value and adjusted basis of $7,500. Assuming Carey had no insurance coverage on the bracelet and his adjusted gross income for 2019 is $45,000, calculate the amount of his theft loss deduction (after any limitations). I w Problem 5-32 Casualty and Theft Losses (L0 5.10) Kerry's car is totaled in an auto accident. The car originally cost $18,000, but is worth $7,500 at the time of the accident. Kerry's insurance company gives her a check for $7,500. Kerry has $30,000 of adjusted gross income. How much can Kerry claim as a casualty loss on her tax return? w