Taxpayer Information Name: Bryan Jones Address: 1200 Main St. Green Bay, Wiscons
ID: 2328214 • Letter: T
Question
Taxpayer Information
Name: Bryan Jones
Address: 1200 Main St. Green Bay, Wisconsin 12345
DOB: 5/6/1976
Filing Status: Single
SSN: 500-10-2000
Occupation: Staff Accountant
INCOME INFORMATION:
Wages and Compensation
The following information is taken from Bryan Jone’s 2017 Form W-2 Wage and Tax Statement:
Box 1 – Wages, tips, and other compensation
52,000
Box 2 – Federal Withholding
8,750
Box 17 – State Income Tax Withholding
1,000
Interest and Dividends
Bryan has some Certificates of Deposits are Main Street bank which yielded 3,750 in interest in
2017. In addition, Bryan has interest income from municipal bonds in the amount of 1,250.
Also, Bryan received $2100 in qualified dividends from Plum Electronic Co.
Profit/Loss from Business
Bryan has a part-time accounting services business. In 2017, his income and expenses are as f follows:
Service Revenue 7,000
Office Expense 500
Advertising 750
Capital Gains
Bryan had the following stock transactions in 2017:
He sold 1,000 shares of Apex Co. for $ 12,000 on June 7, 2016, which he purchased on April 1, 2014 for 25,000. In addition, he sold 750 shares of Velocity Inc. for $10,000 on September 1, 2016, which he purchased on December 1, 2015 for $5,000.
Rental Real Estate
Bryan owns a rent house which he purchased on July 1, 2014. The income and expenses of the rental real estate unit for 2017 are as follows:
Rental income $12,000
Property taxes $1,500
Depreciation $1,000
Repairs and Maintenance $750
Insurance $2,000
Other Transactions in 2017
1. Bryan received a gift of $4,000 from his brother.
2. Bryan paid $3,000 for the year in alimony to his ex-wife, per divorce decree.
3. Bryan had gambling winnings of $1,000.
4. Bryan was the beneficiary of his mother’s life insurance policy.
His mother died in 2017 and he received $50,000 under this policy.
Read the case Above and determine all items that will be excluded from gross income. In a MS Excel spreadsheet, list all excluded items in column A. In column B, explain why the item is excluded. Thank you.
Box 1 – Wages, tips, and other compensation
52,000
Box 2 – Federal Withholding
8,750
Box 17 – State Income Tax Withholding
1,000
Explanation / Answer
Excluded Item Reason Interest income from Municipal bond amounting $1,250. Interest on state and municipal bonds is excluded from gross income. Gift of $4,000 received from his brother. A gift of upto $14,000 is excluded from gift tax in 2017 as per IRS. Payment of $3,000 for the year in alimony to his ex-wife. IRS allows to exclude amount paid as alimony while calculating gross income. $50,000 received as insurance claim proceeds upon death of his mother. Life insurance proceeds received as beneficiary upon death of insured person are allowed to be excluded while calculating gross income.
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