Assume dividends are taxed as ordinary income

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Harvey and Betty Duran, both age 37, are married with one dependent child. Determine their taxable income from the following information, and their tax liability. Both the ABC and XYZ partnerships are passive activities. Assume dividends are taxed as ordinary income.
Harvey's salary $45,000
Betty's salary 62,000
Dividends received from domestic corporations (nonqualified) 11,000
Interest 7,000
Itemized deductions 6,920
Net loss from ABC partnership (acq 1983) (14,200)
Net loss from XYZ partnership (acq 1988)
Harvey's business income (moonlighting) 7,700
Harvey's business deductions (before home office expenses 22,000
Harvey's home office expenses 10,500
Net loss on rental property (31,000)
Federal income tax withheld 9,600

- Assume Harvey and Betty do not have any at-risk basis for partnerships ABC and XYZ.

- Assume they are fully at risk for the "moonlighting" business.

- Ignore the home office expenses.

Reference no: EM13519063

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