1. Tad Trumbell is marries and attending State University. Tad and Mary have one
ID: 2593635 • Letter: 1
Question
1. Tad Trumbell is marries and attending State University. Tad and Mary have one child. Mary worked to help put Tad through school. The child, who is four years old is kept at a daycare center. Tad paid the school $3500 this year to keep the child. Tad and Mary had an income of $14,000 this year, all of which was eaned by Mary. Assuming Tad attends school for 12 months, what amount may Tad and Mary claim as a child care credit? fignore the income tax limitation) 2a. Agnes Green, single, has a gross income of $138, 000, adjusted gross income of $70,000 and a taxable income of $24,500. Her regular income tax liability was $3,221. She had adjustments to taxable income of $10,000 and tax preferences of $80,000. What is Ms. Green's tax liability? 2b. A married couple has a taxable income of $65,000. Their regular income tax is $7,963. If they have tax preferences of $50,000 and adjustments to taxable income of $4000, what is the total tax due after the alternative minimum tax? 3. Stanley Steamer purchased 1000 shares of Patrick Corporation common stock for $6 per share in 2010. On September 26, 2016, he received 1,000 nontaxable stock rights entitling him to buy 200 additional shares of Patrick Corporation common stock for $10 per share. On the day that the rights were issued, the fair market value of the stock was S12.50 per share ex-rights and that of the rights was $2.50 each. Stanley sold 500 of the rights for $1,100 on October 24, 2016, and let the others expire. a) What is the gain or loss that Stanley should report in 2014 b) What gain or loss should Stanley report if the value of the rights were $1.25 instead of $2.50 Mike Morgan gives Paul Piers property worth $35,000, Mike's basis in the property is $30,000 4. a) If Paul sells the property for $37,000, what is his gain or loss on the sale? b) If Paul sells the property for $25,000, what is his gain or loss? c) If the fair market value on the date of the gift is $27,000 and Paul sells the property for $24,500, what is his gain or loss?Explanation / Answer
Before we solve the question let me give a brief about dependent care expenses.
Dependent care expenses are the expenses paid for a qualifying person ( a child who is dependent and under the age of 13,in our case the child is four years old).The expenses are paid so that the parent can go to work,seek employment, attend school.
The dependent care expenses are limited to $3,000 ($250 per month *12 months (Tad attend school for 12 months)). Since adjusted gross income is less than $15,000 ($14000 earned by Mary in the whole and no income earned by Ted ) ,the 35% rate will be applied. applies.
Imputed Earned Income=$3000
Tax Rate= 35%
Dependent Care credit=$1050
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