Graded assignment 5

Gerald and Patty Hanson are married taxpayer with the following income and expenses for 2018:

• Geralds w-2 wages: $80,000
• Pattys w-2 wages: 40,000
• Pattys sole proprietorship (Patty is a noted sculptor)
  • Sales $20,000
  • Materials (8,000)
  • Depreciation (1,000)
• Interest income on their investments $5,000
• Dividend income 500

In additional, Gerald and Patty incurred the following expenses:

• Prescription drugs (after insurance) $450
• Vitamins 100
• Medical insurance premiums 1,350
• Braces for their son (not covered by insurance) 1,500
• Clinic and hospital bills (after insurance) 800
• Property taxes on home 5,000
• State income taxes
  • Withheld from their w-2 6,000
  • Estimated payments 400
• Federal income taxes withheld 30,000
• State and local sales tax paid on new personal auto 1,000
• Interest on home mortgage 10,000
• Interest paid on credit cards 2,400
• Cash contributions to church 3,000
• Contribution of ABC stock to United Way (FMV $10,000, adjusted basis $2,000)
• Patty donated a sculpture to the local art museum The sculpture was appraised at $5,000.
• Gerald, a CPA, paid $300 for his CPA license. His employer does not reimburse the cost for the license.

In addition, Gerald and Patty drove 300 miles this year for medical and dental treatments. Patty also drove 1000 miles to attend a conference for her church. Patty was not a delegate to this conference.

1) For 2018, determine Gerald and Pattys adjusted gross income, itemized deduductions and taxable income.

Please show the work, so i can follow along and learn - your assistance is much appreciated!!