Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Hello, my name is Shady Slim. I understand you are going to help me figure out my taxable income for the year...whatever that means. It's

Hello, my name is Shady Slim. I understand you are going to help me figure out my taxable income for the year...whatever that means. It's been a busy year and I'm a busy man. I just got back from my 55th birthday party! Let me give you the lowdown on my life,

I work for Roca Cola and earned $145,900 in base salary this year. My job's pretty cool. I get a lot of fringe benefits like a membership to the company's gym that costs $400 a year and all the Roca Cola I can drink, although I can't really drink a whole lot. I figure $40 worth this year.

In addition to Roca Cola, I have a little side gig where I make birdhouses and sell them online. My son paints the houses, he's really talented. Last year, I generated a profit of $12,000 after paying Jr. around $5,000 for his wages. From what I understand, that's gonna cost me $1,712 in self-employment tax. But, that's all deductible...right?

Let me tell you a few more things about my life. I am divorced from my wife, Alice. She's a lawyer who divorced me a few years ago because I was "unethical" or something like that. I know that it's unusual, but I have custody of my son, Shady, Jr. The judge owed me a few favors and I really love the kid. He lives with me full-time and my wife gets him every other weekend. I pay the vast majority of my son's expenses. I think Alice should have to pay some child support, but she doesn't have to pay a dime for that.The judge didn't owe me that much, I guess.

I like to gamble a lot. I won a $27,000 poker tournament in Las Vegas this year. Can you believe I lost $13,000 of it on blackjackjQuery224028486639422739524_1586979680788 So, I'm a little frustrated, but I still came out ahead.

As I was leaving a basketball game one night, this guy hit me with his car. He must have been pretty ticked that he lost. I broke my right leg and my left arm. I sued the guy and got $8,000 for my medical expenses, $3,000 to pay my psychotherapist for the emotional problems I had relating to the injuries (I got really depressed!). Unfortunately, I had a bunch of medical expenses, and this happened before I got insurance through my job. So, my total medical expenses (including the therapist) were $20,000. Good thing I can write off medical expenses.

Oh yeah. I also did a little investing this year. I bought a limited partnership interest in Duds Ltd. For $10,000. I thought it was going to be a real winner, but this year they took a bath. My portion of the loss was $8,000. Well at least I did not actually any work for Duds!

I contributed a lot of money to charity this year (and have the receipts). I'm such a nice guy! I gave $1,000 in cash to the March of Dimes. I contributed some of my old furniture to the church. It was some good stuff! I contributed a red velvet couch and my old recliner. The furniture is considered vintage and is worth $5,000 today (the appraiser surprised me!), even though I only paid $1,000 for it back in the day. When I contributed the furniture, the pastor said he didn't like the fabric and was going to sell the furniture to pay for some more pews in the church. Oh well, some people just have no taste, right? Roca Cola had a charity drive for the United 'Way and I contributed $90. Turns out, I don't even miss it, because Roca Cola takes it right off my paycheck every month...$15 a month starting in July. My pay stub even verifies the contribution. Oh, one other bit of charity from me this year. An old buddy of mine was down on his luck. He lost his job and his house, I gave him $500 to help him out.

I paid a lot of money in interest this year. Can you believe I'm still paying off my student loans, even after 15 years? I paid a total of $900 in interest on my old student loans this year and a total of $950 in personal credit card interest. I also paid $18,000 in interest on my $500,000 home mortgage that helped me buy my dream home. As far as taxes go, I paid $7,000 in real estate taxes for my new house and had $6,500 state income tax withheld from my paycheck.

So there you go. That's this year in a nutshell. Can you figure out my taxable income? And, since you're a student, this is free, right? Thanks, I owe you one! Let me know if I can get you a six-pack of Roca Cola or something.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Management Accounting In A Dynamic Environment

Authors: Cheryl S McWatters, Jerold L Zimmerman

1st Edition

0415839025, 9780415839020

More Books

Students also viewed these Accounting questions

Question

Subjective norms, i.e. the norms of the target group

Answered: 1 week ago