Assignment: Federal Taxation 2018
1. T and Z are married and file a joint return. Their itemized deductions for the current year are $25,000. Assuming the standard deduction is $12,000, T and Z should use________12%____________.
2. For 2018, the deduction is _____________cents per mile for medical travel and ___________cents per mile for charitable travel.
3. The _________ method of depreciation must be used for amortizing intangible property.
4. A casualty loss is usually deductible in the taxable year___________. A theft is deductible in the__________.
5. H's house was flooded this year due to abnormal rainfall. She was forced to stay in a motel while the water subsided. Her motel stay, which cost $600, was not covered by her insurance policy. H may deduct $___________for the motel stay as part of her casualty loss from the flood.
6. Assuming a taxpayer itemizes deductions, medical expenses are deductible only to the extent that they exceed _______% of the taxpayer's AGI.
7. List the four criteria that determine whether a bona fide debtor-creditor relationship exists.
8. P, a calendar year, cash basis taxpayer, started a business on May 1, 2018. His lease required monthly payments of $800 beginning on May 1. Insurance for premises also began on May 1 and was to be paid every three months and cost $125 per month. Premiums were paid on May 1, 2018, August 1, 2018,November 1, 2018 and February 1, 2019. What are the total expenses that P may deduct for 2018?
9. Complete Depreciation Schedule for a passenger automobile used solely for business purposes.
|
Year
|
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
Year 6
|
Year 7
|
Year 8
|
|
Unadjusted Basis
|
56000
|
56000
|
56000
|
56000
|
56000
|
56000
|
56000
|
56000
|
|
Depreciation %
|
20.00
|
32.00
|
19.20
|
11.52
|
11.52
|
5.76
|
|
|
|
MACRS Depreciation
|
|
|
|
|
|
|
|
|
|
Limit
|
10000
|
16000
|
9600
|
5760
|
5760
|
5760
|
5760
|
5760
|
|
Deduction
|
|
|
|
|
|
|
|
|
|
Cumulative Depreciation
|
|
|
|
|
|
|
|
|
|
Adjusted Basis
|
|
|
|
|
|
|
|
|
10. Y's inventory records reveal the following information:
|
Item
|
Cost
|
FMV
|
|
1
|
3,300
|
3,400
|
|
2
|
5,500
|
5,700
|
|
3
|
6,300
|
6,000
|
|
4
|
7,500
|
8,000
|
|
5
|
4,900
|
4,700
|
For financial accounting purposes, Y values inventory using FIFO and the lower of cost or market. For tax purposes, the value of Y's ending inventory is:
11. Peggy and Clyde Wagner have an AGI of $65,000 for 2018. Their expenses for 2018 are:
|
Prescription drugs
|
$4,580
|
|
Interest on home mortgage
|
9,700
|
|
Doctor and dental bills paid
|
2,700
|
|
Hospital bills paid
|
1,900
|
|
Property taxes paid on home
|
3,650
|
|
State Income Taxes withheld from wages
|
2,700
|
|
Safe deposit box rental
|
360
|
|
Interest on automobile loan
|
1,750
|
|
Credit Card Interest paid
|
500
|
|
Medical Insurance Premiums
|
2,600
|
|
Eyeglasses for Peggy
|
565
|
|
Fair Market Value of TPP, Inc stock donated to church
|
2,800
|
|
Union Dues paid by Clyde
|
720
|
|
Cash contributions to church
|
2,800
|
|
Tax preparation fee
|
450
|
Both Peggy and Clyde are under 40 and have lived in Oregon for the entire year. They have four children, ages 8, 10, 14 and 17. They will file a joint income tax return for this year.
a. Calculate their total itemized deductions.
b. What is their taxable income?
c. Calculate their tax liability.
d. If they had a total of $5,600 of Federal withholding from their employment, will they have an overpayment (refund) or underpayment (tax to pay)?
Format your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also include a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also Include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.