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  1. Karl Frederickson is employed as a human resources manager for Toys Unlimited, Inc., and Ellie is a financial planner for her mother's company, Frederickson Investments, Inc., a full service wealth planning firm. They provide the following information:
    They both want to contribute to the presidential election campaign.
    They live at 9876 Fighting Irish Lane, South Bend, IN.
    Karl's birthday is 7/17/1965 and his Social Security number is 555-12-6789.
    Ellie's birthday is 9/11/1967 and her Social Security number is 987-65-4321.
    Karl or Ellie do not have any foreign bank accounts or trusts.
    Karl received a Form W-2 from Toys Unlimited, Inc. that contained the following information:
    • Line 1 Wages, tips, other compensation: $45,000
    • Line 2 Federal income tax withheld: 7,500
    • Line 3 Social Security wages: 45,000
    • Line 4 Social Security tax withheld: 1,890
    • Line 5 Medicare wages and tips: 45,000
    • Line 6 Medicare tax withheld: 653
    • Line 17 State income tax: 2,200
    Ellie received a Form W-2 from Frederickson Investments, Inc. that contained the following information:
    • Line 1 Wages, tips, other compensation: $85,000
    • Line 2 Federal income tax withheld: 12,500
    • Line 3 Social Security wages: 85,000
    • Line 4 Social Security tax withheld: 3,570
    • Line 5 Medicare wages and tips: 85,000
    • Line 6 Medicare tax withheld: 1,233
    • Line 17 State income tax: 4,200
    Page C-3
    Karl and Ellie incurred the following medical expenses for the year:
    • Transportation to Chicago for Karl's cancer treatment: 2,000 miles
    • Unreimbursed hospital charges for Karl: $6,500
    • Unreimbursed prescription drug charges for Karl and Ellie: 1,750
    • Unreimbursed physician charges for Karl and Ellie: 2,200
    • Unreimbursed prescription glasses for Ellie: 150
    • Laser hair treatment for Ellie (so that she will no longer need to shave her legs) 2,000
    Karl and Ellie paid $12,000 of interest payments on their primary residence (acquisition debt of $225,000). They also paid $1,750 of interest expense on Ellie's car loan and $500 of interest on their Visa card.Karl and Ellie paid $4,000 of real estate taxes on their home and $1,000 of real estate tax on a vacant lot they purchased with the hope of building their dream home in the future. They also paid $3,000 in sales tax on Ellie's car and other purchases and $1,000 of ad valoreum tax on their cars.Karl and Ellie made the following contributions this year:
    • American Red Cross $?200
    • United Way 150
    • St. Joseph's Catholic Church 8,000
    • Food for the family of Hannah Barbara (a neighbor who suffered a tragic car accident this past year). 225
    • Stock transfer to the University of Notre Dame (originally purchased for $1,000 in 2005) 750
    Karl incurred $4,000 of unreimbursed meals and entertainment related to his job. Ellie incurred $1,200 of expenses for investment publications, and last year they paid their CPA $500 to prepare their tax return. The roof on Karl and Ellie's house was severely damaged in a hail storm. They had to replace the roof ($7,500), which unfortunately was not covered by insurance because of their high deductible ($10,000).
  2. Karl won $5,000 in the state lottery. He has been playing the lottery for years ($10 in lottery tickets every week ($520 in total) that he saves to keep track of the numbers he plays)

Accounting Basics, Accounting

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  • Reference No.:- M9800702

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