Jason and Jill are married and have a six-year-old daughter. During the year, th

Question

Jason and Jill are married and have a six-year-old daughter. During the year, they sell one acre of land for $80,000. Three years ago, they paid $70,000 for two acres of land. Their other income and deductions are as follows:

The standard deduction is $12,600 for married taxpayers filing jointly. The personal and dependency exeption is $4,000. Dividends and net long-term capital gains are taxed at a rate of 15%.

Round intermediate calculations to the nearest dollar.

Jason and Jill's taxable income is $ . The tax on their eligible dividends and capital gains is $  and totalincome tax liability is $  for the current year.

Jill's commissions $82,000 Jason's salary 46,000 Dividend income 5,000 Interest income 8,000 Short-term loss on sale of stock in Nippon Inc. 15,000 Deductions for adjusted gross income 28,000

Explanation / Answer

Long term capital gin on land is exempted under tax law

therefore jason and jill need not pay any tax on the land sold during the year

Any dividend income received is also exempted and will not form part of the total taxable income.

Salary jason -46000

jills commmison- 82000

interest income 8000

short term loss can be set off with short tewrm or long term income durin gthe year and can be carry forward for the next yuer and can be set off against any short term gain

Since the long term gain is exempted during the year the short term loss cannot be set off with the long term gain therefore the short term loss has to be carried forward in the nextr year and can be set off with any short term gain in the next year.

therefore total taxable income - 46000+82000+8000-28000-12600-4000= 91400 it is also said that the interest income is exempted therefore interest income needs to be deducted.

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