Mr. and Mrs. Poe earned $115,900 compensation income and $963 interest this year
ID: 2449370 • Letter: M
Question
Mr. and Mrs. Poe earned $115,900 compensation income and $963 interest this year and recognized a $600 short-term capital gain and a $7,200 long-term capital gain on the sale of securities. They incurred $4,400 investment interest expense and $12,500 other itemized deductions. They have no dependents. Assume the taxable year is 2015. (Round your intermediate calculations to the nearest whole dollar amount.)
Compute the Poe’s taxable income and income tax on a joint return if they don’t elect to treat any long-term capital gain as investment income.
Mr. and Mrs. Poe earned $115,900 compensation income and $963 interest this year and recognized a $600 short-term capital gain and a $7,200 long-term capital gain on the sale of securities. They incurred $4,400 investment interest expense and $12,500 other itemized deductions. They have no dependents. Assume the taxable year is 2015. (Round your intermediate calculations to the nearest whole dollar amount.)
a.Compute the Poe’s taxable income and income tax on a joint return if they don’t elect to treat any long-term capital gain as investment income.
b. Compute the Poe’s taxable income and income tax if they elect to treat enough long-term capital gain as investment income to allow them to deduct their investment interest.Explanation / Answer
Computation of Taxable income of Mr. and Mrs. Poe Particular Year 2015 1. Income from capital gain Short Term Caoital Gain $600 Long Term Capital Gain $7,200.00 $7,800.00 2. Income From other sources Compensation Income $115,900.00 Interest Income $963 Less: Interest Expenses $4,400 Less: Other Item $12,500.00 $99,963.00 Total Taxable Income $107,763.00 Tax on short term capital gain = $600*15%=90 Tax on Long Term Capital Gain= $7200*20%=1440 Tax on other Income =99963-99963=0 So tax = 1530
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