Chapter 3 - Problems - Jan 23

# Chapter 3 - Problems - Jan 23 - Chapter 3 Problems January...

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Chapter 3 – Problems – January 23rd Problem 40 Wages \$ 3,000 Bank interest 1,500 Bond interest (City of Rochester bond interest is tax-exempt) –0– Gross income \$ 4,500 Less: Standard deduction* (3,300) Personal exemption** (–0–) Taxable income \$ 1,200 b Bank interest \$ 1,500 Bond interest –0– Total unearned income \$ 1,500 Minus: \$850 + \$850 standard deduction (1,700) Income taxed at parents’ rate \$ –0– Income taxed at Nicole’s rate \$ 1,200 Total tax (\$1,200 × 10%)*** \$ 120 Problem 44 a. Earned income \$ 1,400 Interest income 3,200 Gross income and AGI \$ 4,600 Less: Standard deduction [greater of \$850 or \$1,400 (earned income) + \$300] (1,700) Taxable income \$ 2,900 b. Taxed at parents’ rate: Unearned income 3,200 Less: \$850 + \$850 (1,700) Net unearned income (taxed at parents’ rate) \$ 1,500 Taxed at Rhett’s rate: Taxable income \$ 2,900 Less: amount taxed at parents’ rate (1,500) Taxed at Rhett’s rate \$ 1,400 c. The parental election cannot be made as Rhett’s income is not solely from interest

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## This homework help was uploaded on 04/19/2008 for the course ACC TAX taught by Professor Sherman during the Spring '08 term at Saint Joseph's University.

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Chapter 3 - Problems - Jan 23 - Chapter 3 Problems January...

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