The Tax Formula for Individuals, A Brief Overview of Capital Gains and Losses (L

Question

The Tax Formula for Individuals, A Brief Overview of Capital Gains and Losses (LO 1.3, L.O. 1.8)

In 2017, Lou has a salary of $53,300 from her job. She also has interest income of $1,600 and dividend income of $400. Lou is single and has no dependents. During the year, Lou sold silver coins held as an investment for a $7,000 loss.

Table for the standard deduction

Calculate the following amounts for Lou:

Filing Status 2017 Standard Deduction Single $ 6,350 Married, filing jointly 12,700 Married, filing separately 6,350 Head of household 9,350 Qualifying widow(er) 12,700

Explanation / Answer

Part A

Adjusted gross income = $48,300 (salary 53300+interest income 1600 + dividend income 400 - investment loss 7000)

Part B

Standard deduction = $6350

Part C

Exemption = $4050

Part D

Taxable income = $37900 (48300-6350-4050)

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