During 2023, Richard and Greta Van Fleet, who are married and have 2 dependent children (ages 16

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Question:

During 2023, Richard and Greta Van Fleet, who are married and have 2 dependent children (ages 16 (in high school and 19 (a sophomore in college, full-time)), have the following information:

Total salaries $112,000

Bank account interest 6,000

State of Arkansas bond interest 4,000

Gift from Greta’s dad 16,000

Life insurance proceeds (Richard’s mom died) 150,000

Sale of Qualified Small Business Stock (adj. basis =$500,000) 1,250,000

Dividend income (BMW-based in Germany) 7,000

Long-term capital gains 10,000

Short-term capital losses (6,000)

ABC limited partnership interest (passive)* 31,000

XYZ limited partnership interest (passive)* (34,000)

* (these limited partnerships are not real estate related)

They also incurred the following expenses:

Qualified medical expenses $10,000

State & local income taxes paid 6,500

Property taxes on home 4,500

Property taxes on vehicles 750

Qualified residence interest (original amount borrowed = $400,000) 11,000

Cash charitable contributions ($5,500 - church; $1,500 – St. Jude Children’s Hospital) 7,000

Tuition paid for qualified educational expenses for older child who attends Big State University 4,500

They have the following federal tax payments:

Income tax withheld $8,400

Also, they want to make the maximum contribution possible to Roth IRAs for both of them. Both of them are active participants in qualified plans at work. Richard is 66, and Greta is 56.

Be prepared to answer questions regarding gross (total) income, AGI, taxable income, federal tax liability, and additional tax due to the IRS or refund due back to the taxpayers. You should include any relevant credits that we covered to which the taxpayers are entitled based on the facts.