GROUP ASSIGNMENT #2:

TAX FORMULA

Demarco and Janine Jackson have been married for 12 years and have four children who qualify as their dependents. Three of the children are under 17, thus qualify for the $2,000 child tax credit (per child). The oldest child is over 17 and qualifies for the child tax credit for other qualifying dependents. Their salaries for the year (2019) totaled $150,000 and they have $10,000 in qualified business income. The Jacksons incurred $26,500 of itemized deductions.

a. What is the Jacksons taxable income?

1. What would their taxable income be if their itemized deductions totaled $6,500 instead of $26,500?

c. Assume the same facts as in part b. except that the Jacksons report $6,000 of for AGI deductions and $0 itemized deductions. What is the Jacksons taxable income?

4. Assume the original facts except that the Jacksons owned 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?

5. Assume the original facts except that the Jacksons had an $8,000 capital loss during the year. What is the Jacksons taxable income?