Tax Computation Problem

John Benson, age $40,$ is single. His Social Security number is $111-11-1111,$ and he resides at $150$ Highway $51,$ Tangipahoa, LA $70465.$

John has a seven$-$year$-$old child, Kendra, who lives with her mother, Katy. As a result of his divorce in $2016,$ John pays alimony of $$6,000$ per year to Katy and child support of $$12,000.$ The $$12,000$ of child support covers $65\%$ of Katy$$s costs of rearing Kendra. Kendra$$s Social Security number is $123-45-6789,$ and Katy$$s is $123-45-6788.$

John$$s mother, Sally, lived with him until her death in early September $2023.$ He incurred and paid medical expenses for her of $$12,900$ and other support payments of $$11,000.$ Sally$$s only sources of income were $$5,500$ of interest income on certificates of deposit and $$5,600$ of Social Security benefits, which she spent on her medical expenses and on maintenance of John$$s household. Sally$$s Social Security number was $123-45-6787.$

John is employed by the Highway Department of the State of Louisiana in an executive position. His salary is $$95,000.$ The appropriate amounts of Social Security tax and Medicare tax were withheld. In addition, $$9,500$ was withheld for Federal income taxes and $$4,000$ was withheld for state income taxes.

In addition to his salary, John$$s employer provides him with the following fringe benefits:

Group term life insurance with a maturity value of $$95,000$; the cost of the premiums for the employer was $$295.$

Group health insurance plan; John$$s employer paid premiums of $$5,800$ for his coverage. The plan paid $$2,600$ for John$$s medical expenses during the year.

On the death of his aunt Josie in December $2022,$ John, her only recognized heir, inherited the following assets:

Asset Josie$$s Adjusted Basis FMV at Date of Death

Car $$35,000$ $$19,000$

Land$300$ acres $90,000175,000$

IBM stock $15,00040,000$

Cash $10,00010,000$

Three months prior to her death, Josie made a gift to John of a mountain cabin. Her adjusted basis for the mountain cabin was $$120,000,$ and the fair market value was $$195,000.$ No Federal gift taxes were paid.

During the year, John reported the following transactions:

On February $1,2023,$ he sold for $$45,000$ Microsoft stock that he inherited from his father four years ago. His father$$s adjusted basis was $$49,000,$ and the fair market value at the date of the father$$s death was $$41,000.$

The car John inherited from Josie was destroyed in an accident on October $1,2023.$ He had loaned the car to Katy to use for a two$-$week period while the engine in her car was being replaced. Fortunately, neither Katy nor Kendra was injured. John received insurance proceeds of $$16,000,$ the fair market value of the car on October $1,2023.$

On December $28,2023,$ John sold the $300$ acres of land to his brother, James, for its fair market value of $$160,000.$ James planned on using the land for his dairy farm.

Other sources of income for John are:

Details

A table with two columns reads as follows from left to right. Dividend income left parenthesis qualified dividends right parenthesis, dollar $3,500.$ Interest income: Guaranty Bank, $1,000.$ Interest income: City of Kentwood water bonds, $2,000.$ Award from State of Louisiana for outstanding suggestion for highway beautification, $10,000.$

Potential itemized deductions for John, in addition to items already mentioned, are:

State and local property taxes paid on his residence and cabin $$7,000$

State property taxes paid on personalty $3,500$

Estimated Federal income taxes paid $3,000$

Charitable contributions $4,500$

Mortgage interest on his residence $7,200$

Orthodontic expenses for Kendra $4,000$

Part $1$Tax Computation

Compute John$$s net tax payable or refund due for $2023.$