Bruce and Amanda are married during the tax year. Bruce is a botanist at Green Corporation. Bruce earns a salary of $56,000 per year. Green Corporation has an accountable reimbursement plan. During the year, Bruce has $5,000 of employee expenses. Green Corporation reimburses Bruce for only $4,000 of expenses. Bruce decides to put $5,500 into a Traditional IRA. Amanda owns a financial consulting firm as a sole proprietor (it qualifies as a full trade or business). Amanda generates $80,000 of revenues during the year. She has the following business payments associated with her firm: Utilities: $2,000 Office Rent: $14,000 Self-Employment Tax: $5,000 Salary for her secretary: $20,000 Fines/Penalties: $8,000 Payroll Taxes (Employer Portion): $1,000 Business Meals: $2,000 Bribe to police officer to forgive parking violation $1,500 Due to the income and expenses above, Amanda has $39,500 of Qualified Business Income for the purposes of the QBI deduction. Also, during the year a tornado damaged the roof of their personal residence. They purchased the home five years ago for $250,000. The value of the home after the tornado was $200,000. Bruce and Amanda do not know the fair market value of the home immediately before the tornado, but the repair cost was $30,000. The home is located in a federally declared disaster area. They also have the following personal expenses during the year: Medical Expenses: $19,750 State & Local Taxes $4,000 Federal Income Tax Payments: $6,000 The personal exemption amount for the tax year is: $0 The standard deduction amounts are listed below: Single: $12,950 Head of Household: $19,400 Married Filing Jointly: $25,900 Questions: 1. What amount of Amanda's gross buiness revenue is included in Gross Income? _____________________ 2. How much of a deduction does Bruce get ofr the contribution to his IRA? ____________________ 3. Bruce and Amanda's Gross Income: __________________ 4. What is the total deductible amount of Amanda's busines expenses? ________________________ 5. Bruce and Amanda's Adjusted Gross Income: ____________________ 6. Whatis the deductible amoun tof their medical expenses after limitations? ________________________ 7. What is the deductible amount of their deductible casualty loss after limitations? ___________________ 8. What is the total deductible amount of their allowable itemized deducitons after limitations? (Do not include QBI deduciton for this answer) __________________________ 9. What is the amount of their Qualified Business Income deduction? ______________________ 10. Bruce and Amanda's Taxable Income: _____________________

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question
100%

Bruce and Amanda are married during the tax year. Bruce is a botanist at Green Corporation. Bruce earns a salary of $56,000 per year. Green Corporation has an accountable reimbursement plan. During the year, Bruce has $5,000 of employee expenses. Green Corporation reimburses Bruce for only $4,000 of expenses.

Bruce decides to put $5,500 into a Traditional IRA.

Amanda owns a financial consulting firm as a sole proprietor (it qualifies as a full trade or business). Amanda generates $80,000 of revenues during the year. She has the following business payments associated with her firm:

  • Utilities: $2,000
  • Office Rent: $14,000
  • Self-Employment Tax: $5,000
  • Salary for her secretary: $20,000
  • Fines/Penalties: $8,000
  • Payroll Taxes (Employer Portion): $1,000
  • Business Meals: $2,000
  • Bribe to police officer to forgive parking violation $1,500

Due to the income and expenses above, Amanda has $39,500 of Qualified Business Income for the purposes of the QBI deduction.

Also, during the year a tornado damaged the roof of their personal residence. They purchased the home five years ago for $250,000. The value of the home after the tornado was $200,000. Bruce and Amanda do not know the fair market value of the home immediately before the tornado, but the repair cost was $30,000. The home is located in a federally declared disaster area.

They also have the following personal expenses during the year:

  • Medical Expenses: $19,750
  • State & Local Taxes $4,000
  • Federal Income Tax Payments: $6,000

The personal exemption amount for the tax year is: $0

The standard deduction amounts are listed below:

  • Single: $12,950
  • Head of Household: $19,400
  • Married Filing Jointly: $25,900

Questions:

1. What amount of Amanda's gross buiness revenue is included in Gross Income? _____________________

2. How much of a deduction does Bruce get ofr the contribution to his IRA? ____________________

3. Bruce and Amanda's Gross Income: __________________

4. What is the total deductible amount of Amanda's busines expenses? ________________________

5. Bruce and Amanda's Adjusted Gross Income: ____________________

6. Whatis the deductible amoun tof their medical expenses after limitations? ________________________

7. What is the deductible amount of their deductible casualty loss after limitations? ___________________

8. What is the total deductible amount of their allowable itemized deducitons after limitations? (Do not include QBI deduciton for this answer) __________________________

9. What is the amount of their Qualified Business Income deduction? ______________________

10. Bruce and Amanda's Taxable Income: _____________________

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 5 steps

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education