(ACCT 401 – Spring B 2015 1)
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:
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.
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.
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.
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.
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.)
What is Jack’s adjusted gross income? Assume that Jack will opt to treat tax items in a manner to minimize his AGI.
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.
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:
Cost of eyeglasses
Medical insurance premiums
Calculate the amount of medical expenses that will be included with Simpson’s itemized deductions after any applicable limitations.
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.
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.
Calculate Tim’s deductible casualty loss if his AGI is $50,000.
Calculate Tim’s deductible casualty loss if his AGI is $150,000.
How would you answer a. if Tim received an additional $65,000 in interest from municipal bonds this year?