Disregard the alternative minimum tax, Taxation

Assignment Help:

Dan and Cheryl are married, file a joint return, and have no children. Dan is a pharmaceutical salesman and Cheryl is a nurse at a local hospital. Dan%u2019s SSN is 400-20-1000 and Cheryl%u2019s SSN is 200-40-8000 and they reside at 2033 Palmetto Drive, Nashville, TN 28034. Dan is paid according to commissions from sales; however, his compensation is subject to withholding of income and payroll taxes. He also maintains an office in his home as the pharmaceutical company does not have an office in Nashville and when he is not traveling, Dan operates his business from his home office. During 2012, Dan earned total compensation from his job of $125,000, on which $20,000 of federal income taxes were withheld, $4,624 of OASDI, and $1,813 of Medicare taxes. No state income taxes were withheld. Cheryl earned a salary during 2012 of $45,400, on which federal taxes withheld were $5,000, OASDI of $1,907, and Medicare taxes of $658.

During 2012, Dan and Cheryl had interest income from corporate bonds and bank accounts of $1,450 and qualified dividends from stocks of $5,950. Dan also actively trades stocks and had the following results for 2012:
LTCG $4,900
LTCL (3,200)
STCG 0
STCL (7,800)

He had no capital loss carryovers from previous years.
Dan does a considerable amount of travel in connection with his job. He uses his own car and is reimbursed $0.30 per business mile. During 2012, Dan drove his car a total of 38,000 miles (evenly throughout the year), of which 32,000 were business related. He also had business-related parking fees and tolls during the year of $280. Dan uses the mileage method for deducting auto expenses. Dan also had the following travel expenses while away from home during the year:
Hotel $4,200
Meals 820
Entertainment of customers 1,080
Tips 100
Laundry and cleaning 150
Total $6,350

Dan was reimbursed for the travel expenses by his employer, pursuant to an accountable plan, in the amount of $5,080.
Dan%u2019s expenses in connection with his office in the home were as follows:
Office supplies $ 290
Telephone (separate line) 1,100
Utilities (entire house) 3,400
Homeowners insurance 600
Interest and property taxes (see below for totals)
Repairs and maintenance (entire house) 800

Dan%u2019s office is 300 square feet and the total square footage of the house is 3,000 square feet. Dan and Cheryl purchased the house on June 12, 1998, for $280,000, of which $40,000 is attributable to the land.

Cheryl incurred several expenses in connection with her nursing job. She paid $450 in professional dues, $200 in professional journals, and $350 for uniforms.

Dan and Cheryl had the following other expenditures during the year:
Health insurance premiums (after-tax) $ 4,400
Doctor bills 470
Real estate taxes on home 2,200
Personal property taxes 400
Mortgage interest 15,600
Charitable contributions%u2014cash 9,000
Charitable contributions%u2014GE stock owned for 5 years:
FMV $12,000
Adjusted basis 2,000
Tax preparation fees 750
Compute Dan and Cheryl%u2019s income tax liability for 2012. Disregard the alternative
minimum tax. Use form 1040

 


Related Discussions:- Disregard the alternative minimum tax

What is the standard deviation of return, A client of Investment Advisor As...

A client of Investment Advisor Associates (IAA), Gillian Bissett, has recently won $5 million in the lottery and has asked for investment advice. She has indicated that she would l

Evaluate the accuracy of federal tax, A1 Evaluate the accuracy of the term ...

A1 Evaluate the accuracy of the term "New South" in describing the post-Civil War South, and discuss ways in which the term was and was not appropriate. A2 What was the Indian "

Calculate taxable income, Caroline is a 55-year-old Australian resident. Sh...

Caroline is a 55-year-old Australian resident. She  is the chief marketing officer based in Sydney for XYZ Limited (XYZ), a public company listed on the Australian Securities Excha

TRANSFER PRICING, (i) Discuss, using appropriate examples, the concept of ‘...

(i) Discuss, using appropriate examples, the concept of ‘transfer pricing’ and explain why tax authorities around the world have become concerned about it.

What reasons would a government introduce a tax, Question 1: "The legit...

Question 1: "The legitimate object of government is to do for a community of people whatever they need to have done, but cannot do at all, or cannot so well do, for themselves

What are the tax status of the property, Miguel receives tangible personal ...

Miguel receives tangible personal property as an inheritance in 2011. The property was depreciated by the deceased (Miguel's father), and Miguel will also depreciate it. At the dat

What do you mean by arbitration, Q. What do you mean by Arbitration? ...

Q. What do you mean by Arbitration? Ans: Arbitration is a device for setting up difference between the Railway Administration and contractor by intervention of third person

Goods and services tax, William Potter is a plumber currently operating as ...

William Potter is a plumber currently operating as a Sole Trader in Levin. William has approached you, a tax accountant, for your advice on certain tax matters. William's brothe

Marginal tax bracket, Maskot Industries wishes to determine whether it woul...

Maskot Industries wishes to determine whether it would be advisable to replace an existing, fully depreciated machine with a new piece of equipment. The new machine will cost $300,

Compute gross income, 1. Ben lost his job when his employer moved its plant...

1. Ben lost his job when his employer moved its plant. During the year, he collected unemployment benefits for three months, a total of $1,800. While he was waiting to hear from pr

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd