Examine the case below and do the following:
1. Indicates the income items that are part of the gross income.
2. Indicates the salary exclusions.
3. Identify the deductions to which the taxpayer is entitled to calculate the adjusted gross income.
4. Calculate adjusted gross income.
5. Indicates the status that the taxpayer must file.

Case 3

Carmelo Báez is a veteran, retired, and receives a pension of $40,000 a year. In addition, he hit the lotto and received a prize of $15,000. He is married to Josefa Martinez, who is also retired and receives a pension of $25,000 a year. They both own a clothing business from which they earn $50,000 a year. They also receive interest from the bank on $3,000 and dividends on a $10,000 investment in a business.

Answer rating: 100% (QA)

1 Income items that are taxable i Carmelos pension 40000 ii Lotto he won 15000 iii Josefas salary 25... View the full answer