SHOW STEPS

• Present the netting of capital gains and losses (see Example 7-8 on page 7-15 of the text)

• Present the taxpayers taxable income by applying the tax formula

• Present the calculation of the taxpayers income tax liability in a way that allows me to see your work

• Include the following signed academic integrity statement. Electronic statements may be signed by typing your full name.

INSTRUCTIONS: Using the taxpayer information and sales data below, net any capital gains and losses, apply the capital gain netting process, use the tax formula to determine the taxable income, and calculate the taxpayer's tax liability for the 2020 taxable year. Note that all gain realized on the sale of the rental property is 25-percent rate gain. See the sample solution provided for the recommended presentation. Your solution must show the netting process and tax liability calculations. Solutions that do not show work will not be awarded credit. TAXPAYER INFORMATION Marital status Ordinary income before capital gains (losses) For AGI deductions Itemized deductions Standard deduction QBID Tax credits Married Filing Jointly 349,400 None None 24,800 None None SALES DATA Description Date Purchased Date Sold Adjusted Basis Amount Realized Stock A Stock B Stock C Stock D Antiques Rental property 6/1/2019 1/15/2016 2/1/2020 7/14/2012 3/1/1993 8/15/2009 1/2/2020 11/30/2020 6/15/2020 9/5/2020 7/1/2020 4/22/2020 7,500 9,000 8,200 7,500 20,000 110,000 11,000 401,200 2,700 2,500 21,000 119,000 1 - All gain realized on sale of rental property is 25% rate gain INSTRUCTIONS: Using the taxpayer information and sales data below, net any capital gains and losses, apply the capital gain netting process, use the tax formula to determine the taxable income, and calculate the taxpayer's tax liability for the 2020 taxable year. Note that all gain realized on the sale of the rental property is 25-percent rate gain. See the sample solution provided for the recommended presentation. Your solution must show the netting process and tax liability calculations. Solutions that do not show work will not be awarded credit. TAXPAYER INFORMATION Marital status Ordinary income before capital gains (losses) For AGI deductions Itemized deductions Standard deduction QBID Tax credits Married Filing Jointly 349,400 None None 24,800 None None SALES DATA Description Date Purchased Date Sold Adjusted Basis Amount Realized Stock A Stock B Stock C Stock D Antiques Rental property 6/1/2019 1/15/2016 2/1/2020 7/14/2012 3/1/1993 8/15/2009 1/2/2020 11/30/2020 6/15/2020 9/5/2020 7/1/2020 4/22/2020 7,500 9,000 8,200 7,500 20,000 110,000 11,000 401,200 2,700 2,500 21,000 119,000 1 - All gain realized on sale of rental property is 25% rate gain