So I am not good with the form 1040... and I don't have time to write all of these out...but if you disagree with an answer put your work in next to what you think it is. I have not submitted these yet...good luck
1. C
2. No Clue
3. No Clue
4. E
5. E
6. D
7. C
8. E
9. D
10. D
11. B
12. A
13. D
14. C
15. B
16. A
17. E
18. C
19. D
20. A
21. C
22. C
23. E
24. D
25. B
26. E
27. D
28. C
29. B
30. D
31. E
32. B
33. E
34. A
35. B
36. E
37. E
38. B
39. C
40. C
Just guessing:
ReplyDelete#2. D - $276,000
$284,000 - 8,000 (alimony) = $276,000
They don't get the IRA (book p.12) or student loan deductions (p.9). I'm open to understanding otherwise.
#3. E
Hi, how did you come up with #E for number 3? I'm having a hard time with the dedcutions and curious what you included. Thanks!
ReplyDeleteAlso, Trevor would you mind posting your work for #22, 25, and 32 if its not too much trouble? Thanks everyone!
For #22 I looked up the MACRS Table and used the 7 year (which is standard for office furniture) row and then calculated the first year.
ReplyDelete25 looks like this: Two incidents: Car Incident=$4,400 (Car FMV-$100) Theft Incident=$2,500 (3600+2000-3000-100) Total of $6,900 Now calculate the income exclusion by taking $60,000 (AGI)* 10%=$6,000 subtract that from total losses, $6,900-$6,000=$900
The $100 deductions are the government deductions that are applied per incident.
32 looks like this: Sale of house 500k-25k(sellers expense which lowers income)=475k-100k(cost basis)=Gain realized of 375k-250k(principal residence exclusion amount)=125k
All the other information in the problem is in there to confuse us.
let me know if anyone else needs any work shown.
Here's my work for Problem 3, I got E as well.
ReplyDelete12,000 State & Local Taxes
4,000 Real Estate Taxes
16,500 Home Mortgage Interest
8,000 Charitable Gifts
1,500 Casualty Loss
3,000 Investment Interest Expense
= $45,000
The Medical expenses, the Investment expense (Tier II), professional dues (Tier II) and tax prep (Tier II) did not meet the AGI test.
For number 7: Thoughts on this one? I don't think it's C, since in the problem where we calculated their AGI, they couldn't deduct the contribution.. so an extra $1000 wouldn't affect the income tax liability...?
This is Amanda, by the way. I have no idea why my name comes up as "M".
ReplyDeleteAmanda, I agree iwth you on number 7, I dont think it's C either. Also for number 5, why is it no tax effect? In the book, it states if the individual is not an active participant in a company maintained retirement plan, the AGI limitations do not come into play, and the traditional IRA contribution is deductible no matter how hight the AGI. So, if John's pension was taken away, would this apply?
ReplyDeleteTrevor, can you provide your calcuations for 31 too? I think I calculated something wrong as I got $105K. Thanks again.
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ReplyDeleteTo Kathryn's point on #5. I get the answer as A also for your same reasoning. Page 12 "if neither spouse is considered an active participant in a company-maintained retirement plan, the IRA deduction is not subject to the MAGI limitation. Thus, the couple could have a combined AGI of $10 million, and still take the deduction for the traditional IRA contribution(s), as long as neither spouse is an active participant."...
ReplyDeleteand following on page 13 we should be aware of what it means to be an active participant and the differences between Defined Contribution/401k/DC plans vs defined benefits/DBs/pensions.
For sake of this question, if you are not covered by the DB pension, even if one exists, you are not an active participant. Answer A on 5.
Kathryn, what book are you looking in?
ReplyDeletehi all,
ReplyDeletei have a few differences as well:
#3. D i thought you can't deduct losses bc of 10% agi rule
#7. A
#9. C wouldn't a foreign tax credit directly affect tax liability as opposed to interest income which affects taxable Income?
#26. D i thought real estate was 3 years, am i missing something?
#31. C i deducted fees, is that wrong? i thought we could take them off of basis
on Kim's point above about ?#3, I agree with your point and thank you for reminding us of the 10% rule for being able to include casualty losses on schedule A.
ReplyDeleteI think Q#15 is E. Though similar to B, slide #53 of module 2 says: Partner's Tax Basis...increased for partner's share of partnership income. Stacie
ReplyDelete#3. Form 4684 calculation begins with the loss, then reduces by the $100 floor and is further reduced by 10% of the AGI. I think our $1500 is such a small amount that it may just be the final calculation intended to go on Schedule A. In either case, we don't have all the information regarding the loss. Should I send an email to Jim asking him for all of us? He did encourage correspondence.
ReplyDeleteThanks Ladd. i think i am right on #3. The casulty loss is seaparate from Tier II losses Stacie, so i think it has to be excluded.
ReplyDeleteany comments on my other questions?
I agree with Kim that #26 is D, the end of the 3rd year.
ReplyDeletealso agree that 26 is D - real estate rule of 3 years.
ReplyDelete#31. I agree with Kim. $95K + 2 + 10 - 2 (recovery)= $105. Ignore $2K of repairs.
ReplyDelete