Lana and Rey are married, live in Berkeley California, and have a 12 year old dependent child named Del.  The two have wages of $ 95,000 (Lana) and $ 85,000 (Rey) during the calendar year 2020 with total state income tax withholding of  $14,200, total federal income tax withholding $25,000, total social security withholding of $ 11,160, and total medicare withholding of $2,610.  

Lana has interest income of $ 7,300 for 2020 and Lana and Rey have the following gains and losses on sales of property.   Lana sold land held as an investment, with a cost of $ 48,000, bought on 5-7-2010 and sold on 3-4-2020 for $ 39,400.   Lana sold 1,000 shares of Pepsi Cola, Inc. stock, which were bought on 10-9-2019 for $ 54 a share and sold on 9/9/2020 for $ 59 a share (net proceeds after commission).  

Rey had Tropico Inc., stock bought on 8-8-2011 for $ 49,550 which was sold on 8/23/2020 for $93,970 (also net).  All the stocks were sold to unrelated parties.

Finally, Lana bought a Chevy Malibu at an auction as an investment on 6/21/2020 for $ 7,950 but for which Lana was only able to sell to a collector for $  4,250 on 8/21/2020.  

Lana and Rey own their home outright, but have a $ 200,000 home equity loan, which they borrowed to buy stock with, the home value being about $ 1,200,000.  Lana and Rey paid interest on this loan of $ 14,000 during the year 2020 for 2020, and have paid $ 12,500 for home property taxes on both 4-10-2020 and 12-10-2020.  

Lana loaned a friend, Elizabeth Woolridge, $ 7,900 on 6-21-2019.  Her friend signed a note and had paid all the interest due on the loan until this year, in 2020, when Lana's friend declared bankruptcy.  Ms. Woolridge paid Lana only $ 4,200 of the loan back during 2020 and no interest or any other payments during 2020 prior to when her personal finances went sour, and Lana will not receive  the other $3,700 back.  

Total qualified dividends Lana and Rey received during 2020, for example, Pepsi Cola Inc., qualified dividends and Tropico Inc.,  (neither stock qualifies for section 1202, nor 1244 since bought from unrelated individuals) qualified dividends, added up to $ 11,750.  Rey donated some shares of Ford stock  (all required documentation, and substantiation/appraisals were met) to the Salvation Army on 2-2-2020  which were originally bought on 12-14-2012 for $13,840 but were worth $ 44,440 on the date of the donation.  

What is Lana and Rey's  tax refund or amount due for tax year 2020 (separately state the AGI and taxable income totals as well as the capital items netting process and alternative minimum tax)?

Answer rating: 100% (QA)

To calculate Lana and Reys tax refund or amount due for tax year 2020 we need to calculate their adj... View the full answer