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 consists of making craft items for sale at craft shows that are held periodically at various 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. 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 Jessie's craft sales Interest from certificate of deposit Interest from Treasury bond funds Interest from municipal bond funds Expenditures: Federal income tax withheld from Joe's wages State income tax withheld from Joe's wages Social Security tax withheld from Joe's wages Real estate taxes on residence Automobile licenses (based on weight) State sales tax paid $ 144,100 18,400 1,650 716 920 $ 13,700 6,400 7,482 6,200 310 1,150 26,000 2,300 1,690 2,400 Cost of Jessie's craft supplies 4,260 145 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 Home mortgage interest Interest on Masterdebt credit card Medical expenses (unreimbursed) Joe's employee expenses (unreimbursed) Postage for mailing crafts a. Determine Joe and Jessie's AGI and taxable income for the year. Note: Round your intermediate calculations to the nearest whole dollar amount. Answer is complete but not entirely correct. Joe and Jessie's AGI $ 164,955 x Joe and Jessie's Taxable income $ 88,405 ×

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Vijay 

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 consists of making craft items for sale at craft shows that are held periodically at various 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. 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
Jessie's craft sales
Interest from certificate of deposit
Interest from Treasury bond funds
Interest from municipal bond funds
Expenditures:
Federal income tax withheld from Joe's wages
State income tax withheld from Joe's wages
Social Security tax withheld from Joe's wages
Real estate taxes on residence
Automobile licenses (based on weight)
State sales tax paid
$ 144,100
18,400
1,650
716
920
$ 13,700
6,400
7,482
6,200
310
1,150
26,000
2,300
1,690
2,400
Cost of Jessie's craft supplies
4,260
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
Home mortgage interest
Interest on Masterdebt credit card
Medical expenses (unreimbursed)
Joe's employee expenses (unreimbursed)
Postage for mailing crafts
a. Determine Joe and Jessie's AGI and taxable income for the year.
Note: Round your intermediate calculations to the nearest whole dollar amount.
Answer is complete but not entirely correct.
Joe and Jessie's AGI
$
164,955 x
Joe and Jessie's Taxable income
$
88,405 ×
Transcribed Image Text: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 consists of making craft items for sale at craft shows that are held periodically at various 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. 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 Jessie's craft sales Interest from certificate of deposit Interest from Treasury bond funds Interest from municipal bond funds Expenditures: Federal income tax withheld from Joe's wages State income tax withheld from Joe's wages Social Security tax withheld from Joe's wages Real estate taxes on residence Automobile licenses (based on weight) State sales tax paid $ 144,100 18,400 1,650 716 920 $ 13,700 6,400 7,482 6,200 310 1,150 26,000 2,300 1,690 2,400 Cost of Jessie's craft supplies 4,260 145 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 Home mortgage interest Interest on Masterdebt credit card Medical expenses (unreimbursed) Joe's employee expenses (unreimbursed) Postage for mailing crafts a. Determine Joe and Jessie's AGI and taxable income for the year. Note: Round your intermediate calculations to the nearest whole dollar amount. Answer is complete but not entirely correct. Joe and Jessie's AGI $ 164,955 x Joe and Jessie's Taxable income $ 88,405 ×
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