Charles is a 60% partner in CD Partnership, a calendar year partnership. For 2016, Charles received a Schedule K-1 that reported his share of partnership items as follows:
Partnership ordinary income......................................................$105,000
Tax-exempt income............................................................................1,000
Qualified dividend income.................................................................3,000
Short-term capital loss.....................................................................20,000
Sec. 1231 loss....................................................................................17,000
Charitable contributions....................................................................2,000
Cash distribution..............................................................................60,000
Guaranteed payment.......................................................................40,000
In addition, Charles and his wife, Charlene, had the following items relating to activities outside the partnership:
Charlene’s salary.............................................................................$80,000
Long-term capital gain......................................................................49,000
Interest income from corporate bonds............................................5,000
Mortgage interest expense..............................................................12,000
State income taxes..............................................................................8,000
Property taxes on home.....................................................................3,000
Charitable contributions.....................................................................5,500
Withholding on Charlene’s salary....................................................18,000
Estimated tax payments (paid one-fourth
on each of the quarterly due dates)................................................24,000
Charles and Charlene have two dependent children, ages 7 and 9, and file a joint tax return. Calculate the following items for Charles and Charlene:
a. Adjusted gross income (AGI)
b. Taxable income
c. Tax liability
d. Taxes due or refund