Blake and Valerie Meyer (both age 30) are married with one dependent child (age 5). On the


Blake and Valerie Meyer (both age 30) are married with one dependent child (age 5). On the basis of the following information, compute the Meyers' 2018 federal income tax (including any AMT) on their joint return.

  • Blake's gross salary from his corporate employer was $70,000, and his Section 401(k) contribution was $6,300.
  • Valerie's salary from GuiTech, an S corporation, was $29,400.
  • Valerie owns 16 percent of GuiTech's outstanding stock. Her pro rata share of GuiTech's ordinary business income was $13,790, her pro rata share of GuiTech's net loss from rental real estate was $8,100, and she received a $7,000 cash distribution from GuiTech. The ordinary income from GuiTech is qualified business income.
  • Blake received a $15,000 cash gift from his grandmother.
  • Valerie won $6,400 in the Maryland state lottery.
  • The Meyers received a distribution from their investment in Pawnee Mutual Fund that consisted of a $712 qualifying dividend and a $3,020 long-term capital gain.
  • Blake paid $12,000 alimony to a former spouse under a divorce agreement executed in 2011.
  • The Meyers paid $14,200 home mortgage interest on acquisition debt and $2,780 property tax on their personal residence.
  • The Meyers paid $7,000 state income tax and $4,200 state and local sales tax.
  • Valerie contributed $1,945 to the First Baptist Church.
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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Principles Of Taxation For Business And Investment Planning 2019 Edition

ISBN: 9781260161472

22nd Edition

Authors: Sally Jones, Shelley C. Rhoades Catanach, Sandra R Callaghan

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