Lana and Courtney are married, live in Mountain View California, and have wages
ID: 2498538 • Letter: L
Question
Lana and Courtney are married, live in Mountain View California, and have wages of $ 110,000 (Lana) and $ 70,000 (Courtney) during the calendar year 2014 with total state income tax withholding of $5,000, total federal income tax withholding $ 24,000, total social security withholding of $ 11,160, and total medicare withholding of $ 2,610.
Lana has interest income of $ 14,000 and Lana and Courtney have the following gains and losses on sales of property.
Lana sold land held as an investment, with a cost of $ 56,000, bought on 5-7-2010 and sold on 3-4-2014 for $ 45,000.
Lana sold 500 shares of Burnt Norton, Inc. stock, which were bought on 6-2-2014 for $ 292.90 a share and sold on 9/9/2014 for $ 333.40 a share (net proceeds after commission).
Courtney had Salvatore Inc., stock bought on 8-8-2011 for $ 45,350 which was sold on 8/23/2014 for $ 51,750 (also net).
Finally, Lana bought a car at an auction on 6/21/2014 for $28,000 which Lana was able to sell to a collector for $ 32,300 on 8/21/2014.
Lana and Courtney own their home outright, but have a $ 100,000 home equity loan, which they borrowed to buy stock with, the home value being about $ 1,200,000. Lana and Courtney paid interest on this loan of $ 8,000 during the year, and have paid $ 8500 for property taxes on both 4-10-2014 and 12-10-2014. They have no dependents.
Lana loaned a friend, Elizabeth Woolridge, $ 14,000 on 6-21-2011. Her friend signed a note and had paid all the interest due on the loan until this year, in 2014, when Lana’s friend declared bankruptcy. Ms. Woolridge paid Lana only $ 3,000 of the loan back during 2014 and no interest or any other payments during 2014 prior to when her personal finances went sour, and Lana will not receive the other $11,000 back.
Total qualified dividends Lana and Courtney received during 2014, for example, Salvatore Inc., dividends and Burnt Norton Inc., neither stock qualifies for section 1202, dividends, added up to $ 15,000.
Courtney donated some shares of Apple to the S. P. C. A. on 2-2-2014 which were originally bought on 12-14-2005 for $ 23,000 but were worth $ 47,000 on the date of the donation.
What is Lana and Courtney’s tax refund or amount due (separately state the AGI and taxable income totals as well as the capital items netting process for full credit )?
Explanation / Answer
Statement showing computation of Aggregate Gross Income
Amt in $
Particulars Lana Courtney
Wages 110000 70000
Interest Income 14000 Nil
a. Total income other than Capital gain 124000 70000
Income from Capital Gains
Loss on sale of Investment (Land) (11000) Nil
Profit on sale of Shares of Burnt Norton (333.4-292.9)*500 20250 Nil
Profit on sale of Stock of Salvatore Inc. (51750-45350) Nil 6400
Profit on sale of Car (32300-28000) 4300 Nil
Gains on Shares donated to SPCA (47000-23000) Nil 24000
b. Total Capital Gains 13550 30400
So Gross total income (a+b) 137550 100400
Total income of both Lana & Courtney 237950
Dividend Income 15000
Less:- Total state income tax withholding 5000
Total federal income tax withholding 24000
Total social security withholding 11160
Total medicare withholding 2610
Interest on this loan 8000
Property taxes (8500*2) 17000
Bad debt on loan given to Woolridge 11000
Total Incomes 174180
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