Case Study Taxes Dr. Walter Johnson Dr. Johnson, age 52, was divorced in 2008. Children: Charles
Question:
Case Study – Taxes
Dr. Walter Johnson
Dr. Johnson, age 52, was divorced in 2008.
Children: Charles Johnson, age 14, is in the custody of Dr. Johnson’s ex- wife.
Dr. Johnson is employed as a staff doctor at St. George Hospital; he is an active participant in the hospital pension plan.
Dr. Johnson assembled the following information for calculation of his tax liability.
Income
Salary: $250,000
Interest income from taxable money market fund: $2,600
Qualified dividend income: $6,500
Municipal bond interest income: $14,000
Short-term capital gain income: $4,000
Expenses
IRA contribution: $6,500
Alimony payment: $24,000
State and local income taxes: $10,500
Real estate taxes: $4,800
Sales tax on motor vehicle purchase: $2,500
General sales tax: $400
Home mortgage interest: $17,600
Credit card and automobile loan interest: $10,400
Unreimbursed employee business expenses: $1,790
- a) What is Dr. Johnson’s adjusted gross income?
- b) What is Dr. Johnson’s taxable income?
- c) What is Dr. Johnson’s total tax due?
- d) Describe the fundamental methods that Dr. Johnson has used to manage his tax liability effectively.
The Legal Environment of Business A Critical Thinking Approach
ISBN: 978-0132664844
6th Edition
Authors: Nancy K Kubasek, Bartley A Brennan, M Neil Browne