52.

Comprehensive Problem.

Larry Johnson, 45 and single, has the following income and

deductions in 2015. Using the tax rate schedules rather than the tax tables, compute Larrys tax

owed or refund due for 2015. Assume dividends are not qualified.

Salary

$50,000

Interest income

3,200

Dividends

800

Medical Expenses

6,150

Property Taxes on Personal Residence

3,600

Interest on Home Mortgage

7,600

State and Local Income Taxes

2,400

State and Local Sales Taxes

2,000

Investment Interest Expense

5,000

In addition, Larrys car (value = $15,000, cost = $20,000) was stolen during the year, and the

insurance reimbursement was only $7,000. He also had $2,000 of travel expenses related to his

job that were not reimbursed and $3,000 of federal income tax withheld from his salary.

He elects to treat his dividends as net investment income, so they are not subject to the special

long-term capital gains tax rates.