Jesse Brimhall is 35, with good eyesight and single. In 2015, his itemized deduc
ID: 2765594 • Letter: J
Question
Jesse Brimhall is 35, with good eyesight and single. In 2015, his itemized deductions were $4,000 before considering any real property taxes he paid during the year. Jesse’s adjusted gross income was $70,000 (also before considering any property tax deductions). In 2015, he paid real property taxes of $3,000 on property 1 and $1,200 of real property taxes on property 2.
If property 1 is Jesse’s primary residence and property 2 is his vacation home (he does not rent it out at all), what is his taxable income after taking property taxes into account? ?????
If property 1 is Jesse’s business building (he owns the property) and property 2 is his primary residence, what is his taxable income after taking property taxes into account?????
If property 1 is Jesse’s primary residence and property 2 is a parcel of land he holds for investment, what is his taxable income after taking property taxes into account??????
Jesse Brimhall is 35, with good eyesight and single. In 2015, his itemized deductions were $4,000 before considering any real property taxes he paid during the year. Jesse’s adjusted gross income was $70,000 (also before considering any property tax deductions). In 2015, he paid real property taxes of $3,000 on property 1 and $1,200 of real property taxes on property 2.
Explanation / Answer
a. $58,000.
The property tax on both properties are deductible as itemized deductions because neither property is used for business or rental activities and the sum of Jesse’s itemized deductions, including property taxes, exceeds his standard deduction
b. $57,300. The property tax on the business building is deductible for AGI, and the tax on the personal residence is deductible as an itemized deduction
c. $58,000. The answer is the same as part (a). The property taxes on both properties (residence and investment property) are deductible as itemized deductions because neither property is used for business or rental activities.
Description Amount Calculation 1 AGI 70,000.00 2 Standard deductin (5,950.00) 3 itemized deduction (8,200.00) $4,000+,3000,+1200 4 Personal exemption (3,800.00) Taxable income agter property taxes $58,000 1+3+4Related Questions
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