Chapter 4 Question 86: Date: 23rd November, 2015 To Ms. Carmin


Question Description:

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Hello I need assistance in answering the attached question (Problem 98). All answers should be completed in word (preferably in one document) without anything being copy and pasted from another source such as excel. All work must be shown including all formulas used. I have also attached a template to be used when completing the problem, as well as the answers from the referenced previous question. The correct answers are in the red font. 4 pages Chapter 4 Question 86 Reference.docx Chapter 4 Question 86: Date: 23rd November, 2015 To Ms. Carmin Kovach Subject: Preparation of Tax return for the year 2013 With reference to the above subject, it is to bring to your notice that following are the details and the assumptions taken for preparation of the return: The Salary received will be fully taxable Deduction will be available for the alimony paid to Ray amounting to $ 4,800 Deduction will be available for the contribution made towards the pension plan The deductible tuition fee amount can be calculated as under: Particulars Total Tuition Fees Total Income Less: Alimony Paid Amount ($) 2,300 75,945 (4,800) 71,145 Deduction is available as the difference in not more than $ 80,000 Tuition and Fees Deduction (Since the $ 2,000 amount is more than $ 65,000) The fringe benefits are taxable in the hands of the employer. The prize money won will be included in the taxable income. The social security benefits received on the death of father will not be included in the taxable income Source: https://www.cbo.gov/publication/49948 The rental income has been determined as under: Particulars Total Rental Income ($ 400 x 5) Less: Plumbing Costs Deductible Costs Depreciation Rental Income Amount ($) 2,000 300 2,680 1,080 (2,060) Statement showing calculation of income from stocks and bonds: Particulars General Dynamics Common Stock City of Toronto Bonds State of Nebraska Bonds New Jersey Economic Development Amount ($) 300 1,600 400 300 Bonds Grubstake Mining Development Stock Total 1,000 3,600 Statement showing calculation of capital gain/ (loss): Security Nebraska Bonds Cassill Corporation Stock Sale Date 03/14/13 10/18/13 Purchase Date 10/22/10 02/19/13 Type Long-Term Short-Term Sale Price $ 1,900 $ 8,900 Commission paid $ 80 $ 450 Net Proceeds $ 1820 $ 8,450 Basis $ 1,710 $ 9,630 Capital Gain/ (loss) $ 110 $ (1,180) Net Capital Gain/ (loss) = $ (1,070) The dividend income received The compensation received in lieu of the injuries is not taxable. The disability payments received will be taxable. Source: = 50 x $ 3.50 = $ 175 https://turbotax.intuit.com/tax-tools/tax-tips/Taxes-101/Are-Short-Term- Disability-Claim-Payments-Considered-Earnings-/INF14176.html After the above calculations, the adjusted gross income is $ 69,145. The statement showing the calculation is as under: S.no. 1 2 3 4 5 6 7 8 9 10 11 Particulars Annual Salary Alimony paid Allowable contribution Prize Award ($ 5,000 / 10) Rental Income Income from stocks and bonds Capital Gain / (Loss) Dividend Income Disability Payments Less: Tuition Fees Deduction Adjusted Gross Income Amount ($) 80,000 (4,800) (6,400) 500 (2,060) 3,600 (1,070) 175 1,200 (2,000) 69,145 Thanks and Regards (Tax Consultant) Gross Income Salary from ASCI[$80,000 – $6,400 (pension contribution) – $2,500 (flexible benefits plan) Group term life insurance [($150,000 – $50,000) ÷ $1,000] x $0.96 Whole life insurance 420(280 Payment of parking by employer 235)x12 Dues to health club $71,10 0 96 490 420 900 Breakfast cereal promotion sweepstakes prize $5,000 ÷ 10 years Social security survivor’s benefit* Dividend General Dynamics Interest City of Toronto bond (not a US municipality/state) Grubstake S corporation income** ASCI Disability payment Gross Income Deductions for AGI Rental Loss*** Alimony ($100 x 12 months) Net short-term capital loss**** Adjusted Gross Income 500 510 300 1,600 2,000 1,200 79,116 (1,660) (1,200) (1,070) $75,18 6 Read more

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