1. Using the Kapoors’ information, determine the total amount of their itemized deductions. Assume that they’ll use the filing status of married filing jointly, the standard deduction for that status is $11,600, and each exemption claimed is worth $3,700. Should they itemize or take the standard deduction? Prepare a joint tax return for Murali and Amita Kapoor for the year ended December 31, 2011, that gives them the smallest tax liability. Use the appropriate tax rate schedule provided in Exhibit 3.3 to calculate their taxes owed.
2. How much have you saved the Kapoors through your treatment of their deductions?
3. Discuss whether the Kapoors need to file a tax return for their son.
4. Suggest some tax strategies that the Kapoors might use to reduce their tax liability for next year.