Blake and Valerie Meyer (both age 30) are married with one dependent child (age
ID: 2536978 • Letter: B
Question
Blake and Valerie Meyer (both age 30) are married with one dependent child (age 5).
Blake’s gross salary from his corporate employer was $70,000, and his Section 401(k) contribution was $6,300.
Valerie’s salary from GuiTech, an S corporation, was $29,400.
Valerie owns 16 percent of GuiTech’s outstanding stock. Her pro rata share of GuiTech’s ordinary business income was $13,790, her pro rata share of GuiTech’s net loss from rental real estate was $8,100, and she received a $12,000 cash distribution from GuiTech.
Blake received a $12,000 cash gift from his grandmother.
Valerie won $6,400 in the Maryland state lottery.
The Meyers received a distribution from their investment in Pawnee Mutual Fund that consisted of a $712 qualifying dividend and a $3,020 long-term capital gain.
Blake paid $12,000 alimony to a former spouse.
The Meyers paid $14,200 home mortgage interest on acquisition debt and $2,780 property tax on their personal residence.
The Meyers paid $7,000 state income tax and $4,200 state and local sales tax.
Valerie contributed $1,945 to the First Baptist Church.
On the basis of the above information, compute the Meyers’ federal income tax (including any AMT) on their joint return. Assume the taxable year is 2017. Use Individual tax rate schedules and Standard deduction table. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.)
Individual Tax Rate Schedules Married Filing Jointly and Surviving Spouse If taxable income is: Not over $18,650 Over $18,650 but not over $75,900 Over $75,900 but not over $153,100 Over $153,100 but not over $233,350 $29,752.50 + 28% of excess over $153,100 Over $233,350 but not over $416,700 $52,222.50 + 33% of excess over $233,350 Over $416,700 but not over $470,700 $112,728 + 35% of excess over $416,700 Over $470,700 Married Filing Separately If taxable income is: Not over $9,325 Over $9,325 but not over $37,950 Over $37,950 but not over $76,550 Over $76,550 but not over $116,675 Over $116,675 but not over $208,350 $26,111.25 + 33% of excess over $116,675 Over $208,350 but not over $235,350 $56,364 + 35% of excess over $208,350 Over $235,350 Heads of Household If taxable income is: Not over $13,350 Over $13,350 but not over $50,800 Over $50,800 but not over $131,200 $6,952.50 + 25% of excess over $50,800 Over $131,200 but not over $212,500 $27,052.50 + 28% of excess over $131,200 Over $212,500 but not over $416,700 $49,816.50 + 33% of excess over $212,500 Over $416,700 but not over $444,550 $117,202.50 + 35% of excess over $416,700 Over $444,550 Single If taxable income is: Not over $9,325 Over $9,325 but not over $37,950 Over $37,950 but not over $91,900 Over $91,900 but not over $191,650 Over $191,650 but not over $416,700 $46,643.75 33% of excess over $191,650 Over $416,700 but not over $418,400 $120,910.25 + 35% of excess over $416,700 Over $418,400 The tax is: 10% of taxable income $1,865.00 + 15% of excess over $18,650 $10,452.50 + 25% of excess over $75,900 $131,628 + 39.6% of excess over $470,700 The tax is: 10% of taxable income $932.50 + 15% of excess over $9,325 $5,226.25 + 25% of excess over $37,950 $14,876.25 + 28% of excess over $76,550 $65,814 39.6% of excess over $235,350 The tax is: 10% of taxable income $1,335.00 + 15% of excess over $13,350 $126,950.00 + 39.6% of excess over $444,550 The tax is: 10% of taxable income $932.50 + 15% of excess over $9,325 $5,226.25 + 25% of excess over $37,950 $18,713.75 + 28% of excess over $91,900 $121,505.25 + 39.6% of excess over $418,400Explanation / Answer
Blake & Valeries' income Blake's salary 70000 Valerie's salary 29400 cash distribution from Guitech 12000 Winning from Mary land state lottery 6400 total income 117800 less : deductions section 401(k) contribution 6300 Alimony 12000 home mortgage interest 14200 property tax 2780 state income tax 7000 state and local tax 4200 total deductions 46480 Gross taxable income 71320 less : standard deduction 12700 taxable income 58620 tax is 1865+ 15% over 1865 10378.25 Add : capital gains tax 15 % on qualified dividends and capital gains 559.8 total tax 10938
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