3-56 During 2015, Gary earned $57,000 as an executive. Gary, who is single, supp

Question

3-56 During 2015, Gary earned $57,000 as an executive. Gary, who is single, supported his half sister, who lives in a nursing home. Gary received the following interest: $400 on City of Los Angeles bonds, $200 on a money market account, and $2,100 on a loan made to his brother. Gary spent one week serving on a jury and received $50. Gary received a refund of federal income taxes withheld during the prior year of $1,200 and a state income tax refund of $140. Gary had itemized deductions last year of $8,000 which included $1,000 of state income taxes. Gary received qualified dividends from Ace Corporation of $1,000 and from Tray Cor. poration of $1,400. Gary's itemized deductions equal $9,000, and withholding for federal income taxes is $8,000. Compute Gary's tax due or refund due for 2015.

Explanation / Answer

computation of Tax liability

Salary income $57000 Interest from LA bonds 400 Interest from money market account 200 Interest on loan 2100 Amount recieved from jury 50 Dividends from ACE corporation 1000 Dividends from Tray corporation `1400 Gross taxable income 62150 Less: Deduction 9000 Taxable income 53150 Tax liability Upto 9225 @10 923 9226 to 37450 @15% 4234 37451 to 53150 @ 25% 3925 Total tax 9082 Less: Prepaid taxes 8000 Net tax liability 1082

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