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Spencer Strasmore engages in the following transactions in 2020: Receives wages paid in cash of $50,000 In addition to his wages, his employer paid health
Spencer Strasmore engages in the following transactions in 2020:
- Receives wages paid in cash of $50,000
- In addition to his wages, his employer paid health insurance premiums on his behalf totaling $15,000
- His employer also contributed $10,000 to a 401(k) on his behalf. He also elected to have $10,000 of his wages contributed to the 401(k) (these wages are not included in the $50,000 listed above).
- Spencer received a statement from his 401(k) account stating there was a $2,000 capital gain in the current year that resulted from the sale of a mutual fund held in the 401(k) account. He did not receive any distributions from the account.
- Spencer also has a side business that does consulting. In the current year he provided consulting services for a friend and since his friend was low on cash they agreed that the friend would pay him by painting his house. The FMV of the painting is $8,000.
- Receives municipal bond interest from the city of West Lafayette bonds of $5,000
- Spencer owns stock in Microsoft and the value of the stock increased from $4,000 to $6,000 during 2020. He did not sell any of the stock.
- He received a gift from his grandma of $10,000.
- Spencer owns a 20% interest in a LLC (taxed as a partnership). He received a Schedule K-1 from the partnership indicating that his share of the LLC income was $8,000 of ordinary income and $2,000 of 0/15/20 long-term capital gain income.
- He purchased 100 shares HP stock in 2012 for $2,000 and sold the stock for $1,000 on June 12, 2020. He also purchased 200 shares of HP on June 15, 2020 for $1,200.
- In June 2020, he received a refund of $900 of state income taxes he paid last year. He had itemized deductions of $13,590 in 2019 (assume the standard deduction was $12,200) including state income taxes paid of $1,750.
- He sold Disney stock for $10,000 on April 15, 2020 that he originally purchased on February 13, 2015 for $16,000.
Calculate Spencers gross income for 2020.
Item | Amount included in Gross Income |
Wages |
|
Health insurance premiums |
|
401(k) contributions |
|
Gain in 401(k) |
|
Consulting |
|
Muni Bond |
|
Microsoft stock |
|
Gift |
|
LLC |
|
State tax refund |
|
Net capital gain (loss) (show calculation below) |
|
Gross Income |
|
Net capital gain (loss):
Other Calculations:
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