Problem: 50 points

Bruce and Amanda are married during the tax year. Bruce is a botanist at Green Corporation. Bruce earns a salary of $56,000 per year. Green Corporation has an accountable reimbursement plan. During the year, Bruce has $5,000 of employee expenses. Green Corporation reimburses Bruce for only $4,000 of expenses.

Bruce decides to put $5,500 into a Traditional IRA.

Amanda owns a financial consulting firm as a sole proprietor (it qualifies as a full trade or business). Amanda generates $80,000 of revenues during the year. She has the following business payments associated with her firm:

• Utilities: $2,000
• Office Rent: $14,000
• Self-Employment Tax: $5,000
• Salary for her secretary: $20,000
• Fines/Penalties: $8,000
• Payroll Taxes (Employer Portion): $1,000
• Business Meals: $2,000
• Bribe to police officer to forgive parking violation $1,500

Due to the income and expenses above, Amanda has $39,500 of Qualified Business Income for the purposes of the QBI deduction.

Also, during the year a tornado damaged the roof of their personal residence. They purchased the home five years ago for $250,000. The value of the home after the tornado was $200,000. Bruce and Amanda do not know the fair market value of the home immediately before the tornado, but the repair cost was $20,000. The home is located in a federally declared disaster area.

They also have the following personal expenses during the year:

• Medical Expenses: $18,750
• State & Local Taxes $4,000
• Federal Income Tax Payments: $6,000

The personal exemption amount for the tax year is: $0

The standard deduction amounts are listed below:

• Single: $12,400
• Head of Household: $18,650
• Married Filing Jointly: $24,800

Questions (10):

1) What amount of Amandas gross business revenue is included in Gross Income?

2) How much of a deduction does Bruce get for the contribution to his IRA?

3) Bruce & Amanda's Gross Income:

4) What is the total deductible amount of Amandas business expenses?

5) Bruce & Amanda's Adjusted Gross Income:

6) What is the deductible amount of their medical expenses after limitations?

7) What is the deductible amount of their deductible casualty loss after limitations?

8)What is the the total deductible amount of their allowable itemized deductions after limitations? (do not include QBI deduction for this answer)

9) What is the amount of their Qualified Business Income (QBI) deduction?

10) Bruce & Amanda's Taxable Income: