Carol and Bobby Fitzgerald are both 69 years old, they have unearned income of $75,000 and Carol is blind. They have charitable contributions of $10,000. They bought their home for $150,000 on September 3, 2016. They paid $1200.00 per month in property taxes, $1550 in state and local taxes and $1320.00 in sales tax. They had to sell their home on March 23, 2023 for $300,000.00 due to the fact that Carol needed to be admitted into a nursing home because of medical reasons, so Bobby moved into an apartment close to the nursing home to be able to spend more time with her. He pays $625.00 a month for the apartment and put 2 months down for a security deposit. They have dividend income of $2320.00 and interest income $340.00 on AT&T stock. They also have interest income in Delaware Valley municipal bonds of $2100.00 which Bobby believes was a waste of money. They own and rent out an apartment on the other side of town for $900 a month and the tenant has lived there for five years. They bought that apartment 10 years ago for $105,000.00 and put in new windows and doors costing $23,000.00, a back porch costing 13,750.00 and fixed a leaky faucet which cost them $225.00. Bobby and his wife lived in the apartment for the first eight years of ownership. Because of the mounting nursing home bills Bobby is wondering if he would make any money on the sale of this apartment, since someone offered him $230,000.00. According to last year’s tax filings he has taken $35,000.00 in depreciation and has $1200.00 in various utility expenses. They have a safe deposit box with the deeds to their apartment and marriage license in it, which costs them $45.00 a year. Bobby plays the stock market and in 2023 has a long-term capital loss of $4000.00 and short-term capital loss $2250.00, as well as long term capital gains of $8500.00 and short-term capital gains of $3000.00. They were able to total their medical expenses for the year equaling $21,650.00. They also both receive social security, Bobby received 13,758.00 and Carol received $ 11,589.00 after Medicare A and B were taken out. Bobby also purchased an annuity ten years ago for $18,322.00. He started taking payments of $153.00 per month in May 2023.

A.  What are Bobby and Carol’s taxable income and Tax liability for 2023? Include all itemized deductions as well.

B.  What advice could you give the Fitzgerald’s on maximizing their deductions and help Bobby decide on the Apartment he owns

Answer rating: 100% (QA)

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