M and W are husband and wife. They are filing joint tax returns for both 2013 and 2014 and have zero dependents. Below are their income and deductions for each year. Determine their taxable incomes, if any, for each year.
|
Item
|
2013
|
2014
|
|
Interest Income
|
4,000
|
3,000
|
|
Business gross receipts
|
400,000
|
225,000
|
|
Business cost of sales
|
200,000
|
175,000
|
|
Other business expenses
|
125,000
|
125,000
|
|
M's Salary (not from the business)
|
80,000
|
40,000
|
|
Net Capital Gains/(losses)
|
15,000
|
(3,000)
|
|
Interest Expense on Mortgage
|
25,000
|
22,000
|
|
Property taxes
|
4,000
|
3,000
|
|
Medical expenses (before any limitation)
|
10,000
|
0
|
|
Casualty loss (personal, before any limits but after insurance reimbursement)
|
0
|
4,000
|