Chapter 1 & Part 8.1 w Solutions Spring 12(1)

Chapter 1 & Part 8.1 w Solutions Spring 12(1) - Burkett...

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Unformatted text preview: Burkett — Tax I — Chapter 1 Marginal Tax Rate Examples C Jane is single w/ taxable income of 100K What is Jane’s MTR? 2 <5 % “ 993- ‘?QONV Coda °g After Tax Rate of Return _ Considering investing 10 K in a CD earning 6% or a Richland County bond (tax exemgt) earning 5%. ATR for 'CD & Bond/Which should Jane invest iii? " coo/6 co A: (062, x (\OO‘Z'ZQOZ) : “flax go: —-=§§dZa gents): 6%, X’ \QQQQ What if her MTR = 10%? CO ‘33-- QDQ 546001 “\OJQ 3@\ Sprer GWQS— $15551“ mom “3 $153 / After Tax Benefit H Look at this a different way. What is J ane’s ATB from the CD & Bond? CD: (.991 X lOK zgéooxéoDQ-lecg 29‘ng ; (mg 5% K we :g‘oox (mafia) gm > $00 Burkett — Tax I — Chapter 1 ' Marginal Tax Rate Examples Contd. After Tax Cost Jane is paying rent of 1 lK/year and is considering purchasing the house from herlandlord with the following costs: Mortgage interest (tax deductible) $10K /year Principal payment (non deductible) lK/year Prop Tax (tax deductible) lK/year, Homeowners Insurance (non deductible) 1K/year Total costs to purchase I . $13K/year ATC of Rent? i=>\\\L >6 loQQ Zi‘VK ATC $13K Purchase costs? .1; NT 4: us (me. "e \\<><CKOOZVZSSZ> 2:. “Kano “c. 4r me x well :2, 2.000” @910 ’1" 9qu \‘x‘; fiqun‘t‘xl TEN» View J? him management EN, fining“, Burkett — Tax I — Chapter 1 & Part of 8 Standard Deductions Bill & Jane are MFJ. Bill is 66 & blind. Jane is 64. What is their standard deduction? 00¢: \\)(oc>o T590 3‘ (A2 KWKTO %£\l @LENVD rug—O E7959 W Joe is Bill & Jane’s single-dependent. He earns $3,000 at his part—time job. What is his Standard deduction? § 060 - . In addition to the $3,000 of wages, $3,250 of Joe’s $15,000 scholarship to USC is taxable income. What is his Standard deduction? fie 06"?) ' § a 300% +1525? +360 2 (93:0 7 (a '0 Eur? LTD JT‘U _ 7 fl, Burkett — Tax 1 ~ Chapter I & Part of 8 Exemption Deduction Jake qualifies as a dependent of his parents. What is his exemption deduction? @- Jim & Deb are MFJ with no dependents. I What is their exemption deduction? 3709 3t 2 1'3 “TWOO Jim & Deb are MFJ with 3 dependents. What is their exemption deduction? gxyoib Y gm” :: \Q‘S’Ob Does their AGI affect their exemption deduction in: 2010? 2011? NO La" 2012? (\i 0 WWW Cm—r 2013? Burkett — Tax I — Chapter 1 & Part of 8 Individual Income Tax Calculation Jim & Deb are MFJ & have $79,000 in taxable income. Compute their 2010 & 2011 tax using the rate schedules in Appendix B — 3 & 2 and compare them. 201.0 . ZAQLL havoc “\01. 000 ‘W ‘W Q70 7:“ ' C1393 (—90-0170 6:; (-TS‘OD wow 2519 = @7370 10.000 225723190 ‘11“3 12.000 \Dr Ff; $111?) With the same taxable income, why is 2011 less than 2010? \o PQEQENT (Baa 616—3? 693%? ‘ Compute their tax using the 2010 tax table in Appendix B—S & compare to the 2010 tax computed above. - TA gee. $1 11‘qu . gore Pranm 0804;; \L.\\"s e * ’7: 0.5: PC" Burkett — Tax I ~ Chapter 1 & Part of 8 Long Term Capital Gains Jim & Deb are MFJ & have $79,000 in taxable income (same as the previous page), but included in their taxable income are $4,000 in long—term capital gains. Using the tax rate schedule in the front of the book, compute their 201@ tax liability and compare to their tax liability on the previous page. “1.3,069 T»: 0N (591.000 *2. @500 2532, X Cabot) ‘1 ‘50 .0 _ - . H “000 LTCQDEH'L xxfc‘? 2 C000 ' \\ 1 (god \1, roof)— / Um vs (9503‘ 5%) 1:! ’flbao What if their Taxable income had been $30,000 including $4,000 in long—term capital gains? ’T‘: 30,000 \fYCé - 00J> , * “262.000 7 Tune“; H.000 5: “700 1&7va 63,000 :2, .0513 um: m4 >4 0‘»? a "‘9‘"- Burkett — Tax 1— Chapter 1 & Part of 8 Marrlage Penalty W“ \\. A & B each have taxable income of $28,500. Compute ta); assuming: / Single MFJ T E ‘28va 57 00:) we ON 9.90 950 [-1.000 r700 \S‘LXzocoo 3000 qoom x‘xi‘méma germ K L c ' ' Hm oo - “fi‘m‘teO - Maw \émeJ Repeat assuming each have taxable income of $ $83,600 TE; C823, QUE) H572 DO we 0N €923 éoo mm“ \39 “6W “27088 .41.. -@ “mean .16 TMB ' \‘7 o’Z/Y’ x a i BWOW wage Mf‘g‘e’rmf’m Burkett - Tax I — Chapter 1 & Part of 8 Compute the net tax liability or refund for the taxpayer given the following information assuming that the taxable year is 2011. There are no phase outs for exemption or itemized deductions. Use the 2011 Tax Rate Schedules and round up on the tax liability calculation ' Filing Status MFJ [Gross Income - - $165,000 . (including $10K of Long-term capital gain) Age 67/62 ‘IDeductions For AGI 7,900 Total Exemptions 3 [Nonrefunda'ble Tax Credits 3,500 Total Item Deductions $14,000 |Tax Payments to IRS 22,000 amass—EAL cm: _ 1037000 Dag: er; A61: . < “:01 63 A011 ‘ ' ' , ":1 7.100 6T9 052.9 than + 1,13 0 ’3 6%. (9033 T- DQ040101" [WOOD EV %MPTEZ¢M= BEE $4 3-700 (“3065 WyAgM—f meg/u}: \22,ooo T1“, 15,2, 000 use a <\ o .o 005 \"L’L. (900 T1 0M (@1000 2: qg'oo :03 X $2,060 '3 9:230 - 7—1730 L,ch 1110K a4. \3‘57 \SOC) —§ 2%3‘0 ‘ 4"”7 7- , __ \ N 10 ca (as 00/ PMV‘S" (21,0035 Q6 Farm \ as O Burkett — Tax I — Chapter I & Part of 8 Filing Requirements - Who Must File a Return? 7 See problem 72 on page 8-42 Felecia / $5,700 wages & $225 of interest income 6,: 5’70?) +2.13' _=‘—- gore/5‘ ..___ r us Y‘s-(3:3 55> +99: 5 goo-5y 49— 2:» 5300 M Ga Jason - Dependent W/ $600 of interest income ONM- Memes EN c: «a at“: Q emf: (2% Sta maze --\- a CiS’O +0 1930 Jerry -— Self employed W/ $43,000 gross receipts and $40,300 of business expenses. Also has $1,200 of municipal bond (tax exempt) interest income. .6 31 Leg , 00 o \/ mubfirfigLfi. $X> real; $600+ 3300 :— OSOO /‘ gaze/«QM mgr—swan :. 20067 «+00 Mangus — Age 69, unmarried & legally blind. Also has $10,500 in social security income (tax exempt in his case) & $10,600 of taxable pension income. ' 61: £0,900 ‘ sovfii @800 aa§®07+3700 ‘2; lo 913% NP @qué' Olei‘NOW‘FCJQ. gar/QC] Wayne & Florencia ~— MFJ w/ one dependent. Florencia’s salary of $19,300 is only income. 6: \ \\ “m ; SQ FOE-H3900 +£37v0é©443nr60 : loipoo / '35 @ DOE: No“? "nucleus: beats gimp-l". 9 ...
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This note was uploaded on 02/22/2012 for the course ACCT 403 taught by Professor White during the Spring '11 term at South Carolina.

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Chapter 1 & Part 8.1 w Solutions Spring 12(1) - Burkett...

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