Tom and Tina Thumb (both age 48) are married with no dependent children at home. On the basis of the following information,
compute the Thumb's federal income tax return for 2015 (including any AMT) and SE tax and the amount due with their Form 1040 or
the refund they should receive.
NOTE: All deductions, phase-out amounts, taxes, etc. are to be derived from the 2015 tax laws and rates.
A. Tom's gross salary from Barnum and Bailey Circus was $120,000. He had 10% of his gross salary placed in his company's 401(k)
retirement account.
B. Tina is a professional artist and her self-employment income, after applicable deductions, was $150,000.
C. Tina, as a self-employed business woman, contributes the maximum amount she can to her Keogh retirement plan.
D. Mrs. Thumb made the following donations:
1. $2,000 to the First Methodist Church of Chicago
2. $50 cash to a homless vagrant
3. One of Tina's own oil paintings to a local chapter of Meals on Wheels, a tax-exempt charity. The charity sold the painting for
$3,900 at a silent auction
4. $10,000 cash to the National Democratic Political Party
5. Used household furniture to the Salvation Army. Tina's original cost was $6,800 and the furniture was reasonably worth
$1,200 according to Thrift Shop values
E. The Thumbs made the following interest payments:
1. $21,000 on a $280,000 mortgage incurred to construct (and secured by) their personal residence
2. $3,000 on a $34,000 second mortgage secured by their personal residence. They used the proceeds to pay off their credit
card debt
F. The Thumbs paid the following taxes during the 2015 year:
1. $5,438 of federal income tax estimates for 2015
2. $285 of federal gift taxes
3. $920 of federal employer payroll tax for their housekeeper. They filed the appropriate quarterly payroll forms
and remitted the quarterly taxes in a timely manner
4. $3,710 of Illinois income taxes
5. $2,040 of Illinois sales taxes on consumer goods and services
6. $4,800 county real estate taxes on the personal residence
7. $1,800 local property tax on vacation home
8. $900 local property tax on two automobilies
G. The Thumbs paid the following professional fees during the 2015 year:
1. $4,200 to a local CPA for preparing their Form 1040
2. $900 to a local CPA for preparing their gift tax return
3. $7,800 to an attorney for drafting Mr. and Mrs. Thumb's wills
4. $3,000 to an attorney for estate planning advice
5. $750 to an attorney regarding advice concerning custody of Mrs. Thumb's minor grandson
6. $400 to an attorney for settling a dispute concerning a neighbor's barking dog
H. The Thumbs borrowed $50,000 from a broker in order to purchase Lero, Inc.'s common stock. This year they paid $3,900
of interest on the debt. Their only investment income was a $4,900 ordinary, non-qualified dividend from their investment in
Koal mutual fund.
I. Mrs. Thumb received a $5,000 cash gift from her parents during the year.
J. Mr. Thumb received $12,000 from the Illinois Powerball Lottery for which he spent $1,000 for a ticket. Tax question - based on U.S. tax. Thanks