Required: a) Determine Shauna's taxable income and complete page 2 of Form 1040 (through taxable income, line 10) and Schedule A assuming her AGI is...
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Required:
a) Determine Shauna's taxable income and complete page 2 of Form 1040 (through
taxable income, line 10) and Schedule A assuming her AGI is $107,000.
b) Determine Shauna's taxable income and complete page 2 of Form 1040 (through
taxable income, line 10) and Schedule A assuming her AGI is $207,000.
55. Joe and Jessie are married and have one dependent child, Lizzie. Lizzie is currently
in college at State University. Joe works as a design engineer for a manufacturing
firm while Jessie runs a craft business from their home. Jessie's craft business con-
sists of making craft items for sale at craft shows that are held periodically at vari-
ous locations. Jessie spends considerable time and effort on her craft business and it
has been consistently profitable over the years. Joe and Jessie own a home and pay
interest on their home loan (balance of $220,000) and a personal loan to pay for
Lizzie's college expenses (balance of $35,000). Neither Joe nor Jessie is blind or
over age 65, and they plan to file as married joint. Based on their estimates, deter-
mine Joe and Jessie's AGI and taxable income for the year and complete pages 1
image (59).png
CHAPTER 6
Individual Dedu
and 2 of Form 1040 (through taxable income, line 10), Schedule I and Schedule A.
Assume that the employer portion of the self-employment tax on Jessie's income is
$831. Joe and Jessie have summarized the income and expenses they expect to
report this year as follows:
Income:
Joe's salary
$129,100
Jessie's craft sales
18.400
Interest from certificate of deposit
1,650
Interest from Treasury bond funds
716
Interest from municipal bond funds
920
Expenditures:
Federal income tax withheld from Joe's wages
$13.700
State income tax withheld from Joe's wages
6.400
Social Security tax withheld from Joe's wages
7.482
Real estate taxes on residence
6,200
Automobile licenses (based on weight)
310
State sales tax paid
1,150
Home mortgage interest
14,000
Interest on Masterdebt credit card
2,300
Medical expenses (unreimbursed)
1.690
Joe's employee expenses (unreimbursed)
2.400
Cost of Jessie's craft supplies
4.260
Postage for mailing crafts
145
Travel and lodging for craft shows
2.230
Self-employment tax on Jessie's craft income
1.662
College tuition paid for Lizzie
5,780
Interest on loans to pay Lizzie's tuition
3.200
Lizzie's room and board at college
12,620
Cash contributions to the Red Cross
525
ROGER | CPA Review
Source: Roger CPA Review
Sample CPA Exam questions from Roger CPA Review are available in Connect as
support for the topics in this text. These Multiple Choice Questions and Task-Based
Simulations include expert-written explanations and solutions and provide a starting
point for students to become familiar with the content and functionality of the actual
CPA Exam.

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