USA TAX RULE 2015

1. In 2014, Bob, a single individual, provided support for his 90 year old mother who did not live with him. In 2014, Bob had Agi of $300000 consisting of wages of $200000 and interest income of $100000. The wage income had federal withholding of $40000. Bob also had the follwing itemized deductions in 2014.

Medical $1000

Real Estate Tax $5000

State income tax withholding $10000

Home Mortgage interest $8000

Charitable Contributions $ 4000

When Bob filed his federal and state income tax returns in Aprl, 2015 the returns showded a federal refund of 10000 and a state tax refund of 3000. He received both of these refunds in June, 2015

In 2015, Bob had the following additional information

Wages $360000

Interest Income $10000

Long term capital gains $18000

Short term capital losses $12000

Alimony Paid $24000

Child support payments $18000

Reimbursed business expenses $1000

Divided income $10000

Itemized deductions $11000

Compute Bob's AGI, Taxable income and tax liability for 2015. (Assume that 2014 also used Tax rule for 2015)

2. Claude and Maude (cash basis taxpayers) are married and have 2 children, Rod and Tod. Tod is a single college student, 20years old and earned $8000 during the year and lives at home during the year. Tod received a full scholarship cover the following expenses: Room and Board: $10000, Tuition: $40000, Other: $5000.

Tod saved all of his money, ie non of it went towards his support

Rod, who is 23 years old lived at hoe, made $ 35000 and paid for all of his own support

Claude is a commercial airline pilot. He earned $300000 and had federal withholding of $ 90000

Maude has her own trade or business selling clothes. She had revenue of $23000 and business expenses of $30000

Maude also enjoys playing guitar and occasionally plays as part of a band. For that she had gross revenue of $5000 and expenses related to that income of $3000.

Cluade's father passed away during the year and Claude inherited $100000. Calude did not pay for any of the premiums and was the named beneficiary.

Clude and Maude had the following other sources of income:

Interest income from US Treasury Bonds: $20000

Interest from state of Mass : $5000

Dividends from Apple stock: $8000

Short term capital gains: $15000

Long term capital gains: $4000

Rental income: $10000

Rental expense: $11000

Claude and Maude had previously been lent money from a friend in the amount of $20000 which was never paid back and forgive by the friend in the current year.

In addition to the above information, Claude and Maude had other itemized deductions of $40000.

Assume that there is no limitation on the itemized deductions other than the normal phase out, if any.

Calculate the tax due or refund for Claude and Maude for the year. (Tax rule: 2015)