Denise (D) works as a paralegal and holds two side businesses too! She and her husband Bob
Question:
Denise (“D”) works as a paralegal and holds two side businesses too! She and her husband Bob divorced on 12/25/17 – Merry Christmas! She did not file her 2017 tax return and needs your help. Here are the transactions during 2017, unless noted otherwise
Salary - D | $80,000 | |
Salary - Bob | 50,000 | |
Interest income on bonds—(owned by Denise) | ||
Issued by City of Newark NJ | $7,000 | |
Issued by Apple Corporation | 11,000 | |
Dividend income – Microsoft Corp (owned by Bob) | $3,000 | |
Recovery from car accident—Denise | ||
Cash received for - Personal injury damages (broken leg) | 200,000 | |
Payment for emotional damage she suffered (nightmares, etc) | 110,000 | |
Gift from parents of the child (side job) | 30,000 | |
Salary from the parents of the child (side job) | $1 | |
Inheritance received from deceased uncle | 100,000 | |
Prize – raffle Denise bought | 500 | |
Child support paid by D to Bob– starting 1/1/18 – monthly | 1,000 | |
City and state income taxes paid by Denise | (4,000) | |
Bank loan obtained to buy refrigerator – for Denise side business | 2,000 | |
Net Profit from D’s side business – Cupcakes By D | 2,000 | |
Paid first alimony payment to Bob on 12/31/17 | (1,000) | |
Loss on sale of bicycle used for personal pleasure | (400) | |
Gain on sale of boat owned for personal use | 5,000 | |
Gain on sale of Dupont stock (held for 18 months as an investment) | 6,000 | |
Property taxes paid | (12,000) |
Denise has 2 children under age 8, who lived with Bob after the divorce and who he supports and will support more than 50% of the cost to raise them. She hardly ever sees the kids! Denise’s ex-husband Bob died in 2019 - sad.
Look at the tax formula – “all income” and take out amounts that can be excluded. That’s the starting point. Then certain “above the line” adjustments get made to arrive at AGI. Then certain “below the line” adjustments get made to arrive at Taxable Income.
What is D’s “Adjusted Gross Income” for 2017? ______________
What is D’s taxable income for 2017? _______________
Assume – Standard Deduction – 2017 – Single $6000; HOH $9,000; MFJ $12,000.
-2018 – Single 12,000; HOH $18,000; MFJ $24,000
Expert Answer:
Solution Ds Adjusted Gross Income for 2017 491600 Ds taxable income for 2017 400000 Ans1 Adjusted In... View the full answer
