Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

What would the total adjusted gross income and taxable income be? Her date of birth is May 15, 1948. During 2020 she actually was diagnosed

What would the total adjusted gross income and taxable income be?

Her date of birth is May 15, 1948. During 2020 she actually was diagnosed as being legally blind. She donated some cash of 400 to a local charity (American Cancer Society). Historically, she was told that she could not take charitable donations because she was not an itemized taxpayer."

She indicated that her income was $21,877 as that is what she remembered receiving during the 2020 year from Social Security and her retirement account

She visits her children a lot (they live in Illinois). When she travels to visit them, she rents her house out through her local church. The church pays her $50 per day for the rental of her home. She rented her house out for 60 days and lived in it for 240. The other days she was staying with relatives out of state, etc. In asking her about any additional income that she might have; she mentions that she did receive around $1 per month from her local bank. She did not receive any tax forms (1099-INTs) related to this. She is retired, she does some small jobs for the local church. Essentially, they pay her $20 a week to walk dogs that are dropped off at the doggie day care facility that the church operates. Total amount paid was $1,040. No 1099 was received. When talking about taxes, she emembered that back in 2015 she invested $4,000 in her cousins (Willies) startup lawncare business (an S Corporation). She was the only investor into the business. Unfortunately, COVID caused the business to struggle and in 2020, Willie closed the business for good. All assets were sold to pay liabilities she received nothing; her stock is worthless. In talking you discover that she runs a knitting business. She knits socks and sweaters and sells them once a quarter at a flea market that she attends. She has been doing this for the last six years and although she tries to make a profit it has never happened (and honestly probably never will). But it keeps her busy. During 2020 she sold $2,000 in sweaters. She provided you with receipts that shows she spent $2,200 in yarn and another $300 in travel costs (fuel, tolls, etc.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting Theory And Practice

Authors: M. W. E. Glautier, Brian Underdown

7th Edition

0273651617, 978-0273651611

More Books

Students also viewed these Accounting questions