Kristen rented out her home for 15 days during the year for $3,200. She used the home for personal purposes for the other 350 days. She allocated the following home expenses to the rental use of the home:
Insurance $ 50
Mortgage Interest 500
Property Taxes 180
Repairs and maintenance 1,970
Utilities 200
Depreciation 600
1) Kristen's AGI is $120,000 before considering the effect of the rental activity. What is Kristen's AGI after considering the tax effect of the rental use of her home?
2) Sally is single and she files a separate tax return in 2012. She claims two exemptions (2 x 3,800 = $7,600). She claimed the standard deduction for regular tax purposes ($5,950). She had no other adjustments. Her regular taxable income was $102,000. Required: What is Sally's Tentative Minimum Tax?
3) Terry, an athlete, makes $2,000,000 playing professional sports and $1,000,000 in endorsements. Assume that FICA is 6.2% of the first $120,000 earned this year and Medicare is 1.45%. How much will be withheld from Terry's salary for each employer, and what is the net amount that Terry pays in for FICA and medicare. In one paragraph (not a full memo), please explain your answer.