Jane Smith, age 40, is single and has no dependents. She is employed as a legal secretary by Lega…
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Question “Jane Smith, age 40, is single and has no dependents. She is employed as a legal secretary by Lega…”
Jane Smith, age 40, is single and has no dependents. She is
employed as a legal secretary by Legal Services, Inc. She owns and
operates Typing Services located near the campus of Florida
Atlantic University at 1986 Campus Drive. Jane is a material
participant in the business. She is a cash basis taxpayer. Jane
lives at 2020 Oakcrest Road, Boca Raton, FL 33431. Jane’s Social
Security number is 123-45-6789. Jane indicates that she wants to
designate $3 to the Presidential Election Campaign Fund. Jane had
health insurance for all months of 2018. During 2018, Jane had the
following income and expense items: a. $100,000 salary from Legal
Services, Inc. b. $20,000 gross receipts from her typing services
business. c. $700 interest income from Third National Bank. d.
$1,000 Christmas bonus from Legal Services, Inc. e. $60,000 life
insurance proceeds on the death of her sister. f. $5,000 check
given to her by her wealthy aunt. g. $100 won in a bingo game. h.
Expenses connected with the typing service: Office rent $7,000
Supplies 4,400 Utilities and telephone 4,680 Wages to part-time
typists 5,000 Payroll taxes 500 Equipment rentals 3,000 i. $9,500
interest expense on a home mortgage (paid to San Jose Savings and
Loan). j. $15,000 fair market value of silverware stolen from her
home by a burglar on October 12, 2018. Jane had paid $14,000 for
the silverware on July 1, 2008. She was reimbursed $10,000 by her
insurance company. k. Jane had loaned $2,100 to a friend, Joan
Jensen, on June 3, 2014. Joan declared bankruptcy on August 14,
2018, and was unable to repay the loan. Assume that the loan is a
bona fide debt. l. Legal Services, Inc., withheld Federal income
tax of $15,000 and the appropriate amount of FICA tax from her
wages. m. Alimony of $10,000 received from her former husband, Ted
Smith; divorce was finalized in 2012, and no changes have been made
to the divorce decree since that time. n. Interest income of $800
on City of Boca Raton bonds. o. Jane made estimated Federal tax
payments of $2,000. p. Sales taxes from the sales tax table of
$946. q. Property taxes on her residence of $3,200. r. Charitable
contribution of $2,500 to her alma mater, Citrus State College. s.
on November 1, 2018, Jane was involved in an automobile accident.
At the time of the accident, Jane’s automobile had an FMV of
$45,000. After the accident, the automobile’s FMV was $38,000. Jane
acquired the car at a cost of $52,000. Jane’s car was covered by
insurance, but because the policy had a $5,000 deduction clause,
Jane decided not to file a claim for the damage. Calculate the
greater of the standard deduction or itemized deductions. 6.
Calculate the qualified business income deduction. 7. Calculate
total taxable income. 8. Calculate the income tax liability. 9.
Calculate the total tax credits available. 10. Calculate total
withholding and tax payments.
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