Reference no: EM131629108

Question: It was the end of a very busy and successful year for Casim Walker's environmental consulting business, and the paperwork had been piling up. Most of it seemingly had to do with taxes. Casim had an inquiry from his home state of Colorado regarding sales tax due on some environmental testing equipment he had purchased out of state. The equipment totaled $11,884.76, and the 2.9% sales tax apparently had not been paid. Lou made a mental note to send in payment with the return envelope. The sales tax inquiry reminded him that he still hadn't calculated the sales tax for the radon testing units that he was going to market online. Each unit sold for $9.95, but he knew a portion would have to be paid to the state for sales tax. Another letter contained the new assessment from the county for his small office building. The letter indicated that the market value of the building had increased to $350,000, and the assessed valuation had increased to 60%. And finally, Casim received his last outstanding 1099 form (which shows income for independent contractors) and was finally able to calculate the adjusted gross income for his family of five (husband, wife, three children) as $152,214. Casim knew that he would end up paying a lot of money in taxes, but at least he had all of the information he needed to do

1. Based on Casim's equipment purchase of $11,884.76, how much does he owe the state of Colorado in sales tax? Is state sales tax the only sales tax that Casim needs to be concerned with?

2. Casim plans to sell radon testing units for $9.95 each, or at $9.00 apiece for quantities of 20 or more, sales tax included. Find the marked price and the sales tax for each unit price using a sales tax rate of 2.9%.

3. Using the Walkers' adjusted gross income, find the taxable income and income tax due as a married couple filing a joint return. The Walkers have itemized deductions totaling $26,457. Use $3,650 for each personal exemption.