Brooklyn has been contributing to a traditional IRA for seven years (all deductible contributions) and has a total of $30,000 in the account. In 2021, she is 39 years old and has decided that she wants to get a new car. She withdraws $20,000 from the IRA to help pay for the car. She is currently in the 24 percent marginal tax bracket. What amount of the withdrawal, after tax considerations, will Brooklyn have available to purchase the car?After tax withdrawal: [Text Box for Answer]

Taxes are the main source of revenue for the government. These needs to be paid by the individual to…

Answered: Brooklyn has been contributing to a…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Angela Bower’s husband passed away last year. In 2020, Angela lives in a house with her son Jonathan (age 8) in Fairfield, Connecticut. She also supports her mother, Mona (age 67), who lives just down the road in a 1 bedroom apartment. Angela earned $175,000 in salary as an advertising agency executive. She also had two investment assets during the year. The first was a municipal bond for the city of Fairfield that she paid $10,000 for on the first day of this year that earns a 2% interest rate, paid out at the end of the year. The second was a U.S. Treasury bill that she also paid with $10,000 on the first day of the year that earns a 3% interest rate, paid out at the end of the year. Mona likes to spend her time in leisure and does not work during the year and, as a result, did not file a tax return. Angela has no itemized deductions, no AMT, no credits, and no prepayments. What filing status does Angela use? Qualifying Widower or Widow What was the amount of realizable income for…
Isabel, a calendar year tax payer, uses the cash method of accounting for her soul proprietor ship. In late December she received a $60,000 bill from her accountant for consulting services related to her small business. Isabel can pay the $60,000 bill anytime before January 30 of next year without penalty. Assume her marginal tax rate is 37 percent this year and next year, and that she can earn an after-tax rate of return of 8 percent on her investments. What is the after-tax cost if Isabel pays the $60,000 bill in January?
During the 2020 tax year, Gwen supports her family as a physical therapist. She reports $90,000 of earned income on her Schedule C and paid the following insurance premiums: Family health insurance: $15,000 Family dental insurance: $2,000 Health insurance for her 24-year-old son who is not a dependent: $3,000 Long-term care insurance for her 49-year-old husband: $900 Use the following table for long-term care premium limitations. Attained Age Before the Closeof the Taxable Year 2020Limitation on Premiums 40 or less $430 More than 40 but not more than 50 $810 More than 50 but not more than 60 $1,630 More than 60 but not more than 70 $4,350 More than 70 $5,430 What is Gwen's self-employed health insurance deduction for 2020?$fill in the blank 1
Michael has $44,000 in his RRSP and $23,000 in his TFSA. He is about to buy his first house, in 2021, and he wants to take smart decisions in relation with his current investments. Required: If he is not eligible for the Home Buyer’s Plan (HBP), what would be the tax consequences if he withdraws all of his RRSP and TFSA? b. If he uses the HBP, what is the minimal repayment for the years 2021, 2022 and 2023?
Jordan (49) is single and his AGI is $33,000 a year and he is not a full-time student or a dependent. Jordan contributes $4,000 per year to his 401(k). What is Jordan's Saver's Credit on his 2021 tax return?
George (age 42 at year-end) has been contributing to a traditional IRA for years (all deductible contributions), and his IRA is now worth $25,000. He is planning on converting the entire balance to a Roth IRA account. George's marginal tax rate is 24 percent. a. What are the tax consequences to George if he takes $25,000 out of the traditional IRA and contributes the entire amount into a Roth IRA one week after receiving the distribution? Tax Payable=? Penalty=? b. What are the tax consequences to George if he takes $25,000 out of the traditional IRA, pays the taxes due from the traditional IRA distribution, and contributes what's left from the distribution to the Roth IRA one week after receiving the distribution? Tax Payable=? Penalty=? c. What are the tax consequences to George if he takes $25,000 out of the traditional IRA, keeps $10,000 to pay taxes and to make a down payment on a new car, and contributes what's left from the distribution to the Roth IRA one week after receiving…
Barbara is single and owns a home in the city, which is her primary residence. She also owns a cottage at the beach, which she treats as a vacation home. In April 2022, she borrowed $50,000 on a home equity loan and used the proceeds to pay off credit card obligations and other debt. She paid the following in 2022: Mortgage interest (personal residence) Mortgage interest (cottage) Interest on the home equity loan Interest on credit card Mortgage interest for residence Vacation cottage $ 15,000 8,000 Required: Calculate any AMT adjustment concerning interest in 2022. Note: Input all the values, as positive numbers. Leave no cells blank - be certain to enter "0" wherever required. Home equity loan Credit card Interest 5,000 2,500 Regular Taxable Interest Deduction AMT Adjustment
Javier and Anita Sanchez purchased a home on January 1, 2021, for $852,000 by paying $284,000 down and borrowing the remaining $568,000 with a 7 percent loan secured by the home. The loan requires interest-only payments for the first five years. Javier and Anita file a joint return, have great eyesight, and are under 60 years of age. The interest expense is their only itemized deduction for the year. Their marginal tax rate is 32 percent. What is the after-tax cost of their 2021 interest expense? (Round your intermediate calculations and the final answer to the nearest whole dollar amount.) After-tax cost of the interest expense
Tamar owns a condominium near Cocoa Beach in Florida. In 2023, she incurs the following expenses in connection with her condo: Insurance Advertising expense Mortgage interest Property taxes Repairs & maintenance. Utilities Depreciation $ 1,000 500 3,500 900 650 950 8,500 During the year, Tamar rented out the condo for 75 days, receiving $10,000 of gross income. She personally used the condo for 35 days during her vacation. Tamar's itemized deduction for nonrental taxes is less than $10,000 by more than the property taxes allocated to the rental use of the property. Assume Tamar uses the Tax Court method of allocating expenses to rental use of the property. Assume 365 days in the current year. Note: Do not round apportionment ratio. Round all other dollar values to the nearest whole dollar amount. Required: a. What is the total amount of for AGI (rental) deductions Tamar may deduct in the current year related to the condo (assuming she itemizes deductions before considering deductions…
In 2020, Jack and Eri are married. Jack earns $150,000 from his job as a finance executive. Eri earns $25,000 per year as a part-time florist. They have two children, Harry and Gon, ages 2 and 5. Jack's great aunt Jean gave him a check for $17,000 during the year because he is her favorite nephew. Also, Jack's job reimbursed him $5,000 for childcare for his two sons. Eri owns a 20% interest in Flowers to Go (a partnership). The partnership earned $75,000 in operating income during the year, it also paid a cash distribution of $15,000 to Eri during the year. Jack and Eri have a joint checking account that earned interest of $165 for the year. Jack also own City of Mexico bonds which paid interest of $1,000. They also have the following expenses during the year: · Medical Expenses: $22,000 · State & Local Taxes: $11,500 · Federal Income Tax Payments: $10,000 · Cash Charitable Contributions: $3,000 The standard deduction amounts for 2021 are listed below: · Single: $12,550 · Head…
For 2023 Tax Period: Lucy is 17 years old and a dependent of her parents. She receives $9,000 of wages from a part-time job and $10,400 of taxable interest from regular bonds she inherited. Lucy saves all income she makes and doesn't use it for her support. Determine the amount of the tax liability applicable to Lucy, including any possible kiddie tax. Her parents' marginal rate of taxation is 24%.
Alexa owns a condominium near Cocoa Beach in Florida. In 2021, she incurs the following expenses in connection with her condo: Insurance $ 4,400 Mortgage interest Property taxes Repairs & maintenance Utilities 7,250 4,100 700 4,700 16,800 Depreciation During the year, Alexa rented out the condo for 130 days. She did not use the condo at all for personal purposes during the year. Alexa's AGI from all sources other than the rental property is $200,000. Unless otherwise specified, Alexa has no sources of passive income. Assume that in addition to renting the condo for 130 days, Alexa uses the condo for 8 days of personal use. Also assume that Alexa receives $50,250 of gross rental receipts and her itemized deductions exceed the standard deduction before considering expenses associated with the condo and that her itemized deduction for non-home business taxes is less than $10,000 by more than the real property taxes allocated to rental use of the home. Answer the following questions: Note…

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