Liberty ACCT 401 Assignment Chapter 4 Problems Spring 2015

June 10, 2016

Question
(ACCT 401 – Spring B 2015 1)

Assignment:

Chapter 4

1.
Question
(ACCT 401 – Spring B 2015 1)

Assignment:

Chapter 6

1.

Award: 3 out of 3.00 points

Problem 6-36 (LO 6-1)

Clem is married and is a skilled carpenter. Clem’s wife, Wanda, works part-time as a substitute grade school teacher. Determine the amount of Clem’s expenses that are deductiblefor AGIthis year (if any) under the following circumstances:

a.

Clem is self-employed and this year he incurred \$615 for tools and supplies related to his job. Since neither were covered by a qualified health plan, Wanda paid health insurance premiums of \$5,790 to provide coverage for herself and Clem.

b.

Clem and Wanda own a garage downtown that they rent to a local business for storage. This year they incurred \$1,840 in utilities and depreciation of \$1,115.

c.

Clem paid self-employment tax of \$18,600 (the employer portion is \$9,300), and Wanda had \$4,500 of Social Security taxes withheld from her pay.

d.

Clem paid \$45 to rent a safe deposit box to store his coin collection. Clem has collected coins intermittently since he was a boy, and he expects to sell his collection when he retires.

2.

Award: 4 out of 4.00 points

Problem 6-42 (LO 6-1)

This year Jack intends to file a married-joint return with two dependents. Jack received \$166,200 of salary and paid \$7,500 of interest on loans used to pay qualified tuition costs for his dependent daughter, Deb. This year Jack has also paid qualified moving expenses of \$4,750 and \$32,100 of alimony.(Do not round intermediate calculations.)

a.

What is Jack’s adjusted gross income? Assume that Jack will opt to treat tax items in a manner to minimize his AGI.

b.

Suppose that Jack also reported income of \$10,400 from a half share of profits from a partnership. Disregard any potential self-employment taxes on this income. What AGI would Jack report under these circumstances? Again, assume that Jack will opt to treat tax items in a manner to minimize his AGI.

3.

Award: 4 out of 4.00 points

Problem 6-47 (LO 6-2)

Simpson is a single individual who is employed full-time by Duff Corporation. This year Simpson reports AGI of \$60,000 and has incurred the following medical expenses:

Dentist charges

\$

1,270

Physician’s charges

2,210

Optical charges

880

Cost of eyeglasses

305

Hospital charges

3,700

Prescription drugs

625

Over-the-counter drugs

515

1,260

a.

Calculate the amount of medical expenses that will be included with Simpson’s itemized deductions after any applicable limitations.

b.

Suppose that Simpson was reimbursed for \$815 of the physician’s charges and \$1,730 for the hospital costs. Calculate the amount of medical expenses that will be included with Simpson’s itemized deductions after any applicable limitations.

4.

Award: 4 out of 4.00 points

Problem 6-58 (LO 6-2)

Tim suffered greatly this year. In January a freak storm damaged his sailboat and in July Tim’s motorcycle was stolen from his vacation home. Tim originally paid \$27,350 for the boat, but he was able to repair the damage for \$6,800. Tim paid \$17,850 for the motorcycle, but it was worth \$19,950 before it was stolen. Insurance reimbursed \$1,260 for the boat repairs and the cycle was uninsured.

a.

Calculate Tim’s deductible casualty loss if his AGI is \$50,000.

b.

Calculate Tim’s deductible casualty loss if his AGI is \$150,000.

c.

How would you answer a. if Tim received an additional \$65,000 in interest from municipal bonds this year?

Award: 3 out of 3.00 points

Problem 4-26 (LO 4-1)

Jeremy earned \$280,000 in salary and \$7,000 in interest income during the year. Jeremy has two qualifying dependent children who live with him. He qualifies to file as head of household and has \$21,500 in itemized deductions. Neither of his dependents qualifies for the child tax credit. (use the.mhhe.com/connect/0077631714/Tax_rate.JPG”>tax rate schedules.).(Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount. Input all amounts as positive values.)

a.

Use the 2013 tax rate schedules to determine Jeremy’s taxes due.

b.

Assume that in addition to the original facts, Jeremy has a long-term capital gain of \$13,500. What is Jeremy’s tax liability including the tax on the capital gain?

c.

Assume the original facts except that Jeremy had only \$7,500 in itemized deductions. What is Jeremy’s total income tax liability?

rev: 02_13_2014_QC_44900, 02_17_2014_QC_44900, 02_20_2014_QC_44900

2.

Award: 3 out of 3.00 points

Problem 4-27 (LO 4-1)

David and Lilly Fernandez have determined their tax liability on their joint tax return to be \$2,170. They have made prepayments of \$1,000 and also have a child tax credit of \$2,000.

What is the amount of their tax refund or taxes due?(Amounts in (1), (2) and (3) should be entered as positive numbers. )

3.

Award: 3 out of 3.00 points

Problem 4-28 (LO 4-1)

Rick, who is single, has been offered a position as a city landscape consultant. The position pays \$87,500 in cash wages. Assume Rick files single and is entitled to one personal exemption. Rick deducts the standard deduction instead of itemized deductions. (use the.mhhe.com/connect/0077631714/Tax_rate.JPG”>tax rate schedules.)(Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount. Input all amounts as positive values.)

a.

What is the amount of Rick’s after-tax compensation (ignore payroll taxes)?

b-1.

Suppose Rick receives a competing job offer of \$82,500 in cash compensation and nontaxable (excluded) benefits worth \$4,050. What is the amount of Rick’s after-tax compensation for the competing offer?

b-2.

Which job should he take if taxes were the only concern?

4.

Award: 6 out of 6.00 points

Problem 4-50 (LO 4-3)

Jasper and Crewella Dahvill were married in year 0. They filed joint tax returns in years 1 and 2. In year 3, their relationship was strained and Jasper insisted on filing a separate tax return. In year 4, the couple divorced. Both Jasper and Crewella filed single tax returns in year 4. In year 5, the IRS audited the couple’s joint year 2 tax return and each spouse’s separate year 3 tax returns. The IRS determined that the year 2 joint return and Crewella’s separate year 3 tax return understated Crewella’s self-employment income causing the joint return year 2 tax liability to be understated by \$6,800 and Crewella’s year 3 separate return tax liability to be understated by \$6,250. The IRS also assessed penalties and interest on both of these tax returns. Try as it might, the IRS has not been able to locate Crewella, but they have been able to find Jasper.(Leave no cells blank – be certain to enter “0” wherever required.)

a.

What amount of tax can the IRS require Jasper to pay for the Dahvill’s year 2 joint return?

b.

What amount of tax can the IRS require Jasper to pay for Crewella’s year 3 separate tax return?