Dan and Jane are married and have 2 children, Andrea (18) and Frank (12). Andrea qualifies as a dependent and has no income for the year. Dan works for the post office and earns $52,000 this year. He has $6,000 withheld from his paycheck.
Jane was a housewife up until the current year, when she started selling Avon from her house to help make ends meet. They also have a rental unit they purchased 1/1/05 for $130,000. They have interest income of $75, and also had the following security transactions for the current year:
Date Bought Date Sold Basis Sold For
6/1/15 12/1/15 5,000 2,000
7/8/03 9/18/15 3,000 4,000
1/1/15 6/5/15 8,000 6,000
3/15/06 8/1/15 6,000 3,000
5/8/03 6/15/15 10,000 5,000
12/31/07 12/31/15 6,000 9,000
Dan and Jane bought a 3,000 square foot house on 12/1/12. Jane has a 50 square foot office that she uses exclusively for her Avon company, including holding parties where her customers can come and try the products before purchasing them. Her expenses in connection with the office were as follows:
Supplies $3,000
Phone (own line) 200
Utilities (whole house) 4,000
Insurance (whole house) 700
Interest & Property Taxes 6,000
Jane also had the following expenses in conjunction with the business:
Miles Driven 3,268
Entertainment 600
Meals 1,000
Income 21,000
Quarterly Payments 250
The following relates to the rental property:
Income 10,000
Utilities 1,200
Water 700
Insurance 600
Taxes 2,000
They also had the following expenditures:
Fed Income Taxes Paid 2,000
Medical Expenses 13,000
State Income Taxes W/H 1,800
Taxes on House 4,000
Interest on House 2,000
Charitable Contributions 500
1. Compute Business Income and Tax for Jane
2. Compute Income for Rental Property
3. Figure Capital Gains/Losses and any carryforward if necessary
4. Find AGI
5. What is the Amount of Itemized Deductions?
6. What is the Total Amount of FROM AGI Deductions?
7. Compute Tax Liability and Net Tax Due or Refund (Don’t Forget Credits).