Question

1) Demarco and Janine Jackson have been married for 20 years and have four children who qualify as their dependents. The couple recieved salary income of $175,000 qualified business income of $17,500 from an investment in a partnership, and they sold their home this year. they initially purchased the home three years aho for $237,500 and they sold it for $287,500. The gain on the sale qualified for the exclusion from the sale of a principal residence. THe Jacksons incurred $18,000 of itemized deductions, and they had $4,3000 withheld from their paychecks for federal taxes. They are also allowed to claim a child tax credit for each of their childrem. However, because Candice is 18 years of age, the Jacksons may claim a child tax credit for other qualifying dependents for Candice.

A) What is the Jacksons' Taxable income, and what is their tax liability or (refund)?

Gross income $xxxx

For AGI deductions $xxxx

Adjusted gross income $xxxx

Standard Deduction $xxxx

Itemized deduction $xxxx

Greater of standard deductions or itemized deductions $xxxx

deduction for qualified business income $xxxx

Total deductions from AGI $xxxx

Taxable income $xxxx

Income Tax liabiliity $xxxx

Other Taxes $xxxx

Total Tax $xxxx

Credits $xxxx

Prepayments $xxxx

Tax Due or Refund $xxxx

B) What would their taxable income be if their itemized deductions totals $29,500 instead of $18,000?

Gross income $xxxx

For AGI deductions $xxxx

Adjusted gross income $xxxx

Standard deduction $xxxx

Itemized deductions $xxxx

Greater of standard deductions or itemized deduction $xxxx

Deduction for qualified business income $xxxx

Total deductions from AGI $xxxx

Taxable Income $xxxx

C) What would their taxable income be if they had $0 itemized deductions and $9,000 of for AGI deductions?

Gross income $xxx

For AGI deductions $xxxx

Adjusted gross income $xxxx

Standard deductions $xxxx

Itemized Deductions $xxxx

Greater of standard deductions of itemized deductions $xxxx

Deduction for business qualified income $xxxx

Totoal deductions from AGI $xxxx

Taxable income $xxxx

E) Assume the original facts but now suppose the Jacksons also incurred a loss of $5750 on the sale of some of their investments assets. What effect does the $5750 loss have on their taxable income?

Increase/decrease/no change $xxxx

F) Assume the original facts but now supposed the Jacksons own investments that appreciated by $10,000 during the year. The Jacksons believe the investments will continue to appreciate, so they did not sell the investments during this year. What is the Jacksons taxable income?

Answer 1

A) $42,960

B) $40,200

C) $45,120

In all cases, income from different heads are included. Then the possible deductions are made and tax slab applied to 24% as its a case of couple filing tax jointly.

Let me know if more elaboration required.