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    Computing Taxable Income and Tax Due or Refund

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    Please help me in completing the following take-home problem
    Introduction:
    Lisa is single has a dependent child, Ava, who lives with her. After her divorce, Lisa, was awarded the permanent custody of Ava, and has not agreed to waive her right to claim Ava as a dependent.

    Task:
    Compute Lisa's taxable income and her net tax due or refund expected for 2005.

    Lisa has the following items as income and expenses in:

    Income:
    Salary $60,000
    Cash dividends 3,000
    Interest income on City of New York bonds 5,000
    Interest income on U.S. Treasury bills 4,000
    Net rental income 3,500
    Alimony received from ex-husband 2,500
    Child support received from ex-husband 3,500
    Sales of capital assets:
    Stock held for 3 months (basis is $12,000) sold for 18,000
    Investment land held 5 years (basis is $30,000) sold for 14,000
    Life insurance proceeds received on the death of her mother 100,000
    Expenses:
    Home mortgage interest 6,000
    Property taxes on home 2,000
    Charitable contributions 7,000
    Qualifying child care expense 3,700
    Federal income tax withheld 8,000

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    https://brainmass.com/business/accounting/computing-taxable-income-tax-due-refund-311065

    Solution Preview

    For purposes of this exercise, I assume that Lisa's filing status is "head of household."

    Salary $60,000
    Cash dividends 3,000
    Interest income on U.S. Treasury bills 4,000
    Net rental income 3,500
    Net deductible capital loss ( 3,000)
    Alimony received from ex-husband 2,500
    Adjusted gross income $70,000
    Itemized deductions:
    Home mortgage interest ...

    Solution Summary

    Lisa is single has a dependent child, Ava, who lives with her. After her divorce, Lisa, was awarded the permanent custody of Ava, and has not agreed to waive her right to claim Ava as a dependent.

    Task:
    Compute Lisa's taxable income and her net tax due or refund expected for 2005.

    Lisa has the following items as income and expenses in:

    Income:
    Salary $60,000
    Cash dividends 3,000
    Interest income on City of New York bonds 5,000
    Interest income on U.S. Treasury bills 4,000
    Net rental income 3,500
    Alimony received from ex-husband 2,500
    Child support received from ex-husband 3,500
    Sales of capital assets:
    Stock held for 3 months (basis is $12,000) sold for 18,000
    Investment land held 5 years (basis is $30,000) sold for 14,000
    Life insurance proceeds received on the death of her mother 100,000
    Expenses:
    Home mortgage interest 6,000
    Property taxes on home 2,000
    Charitable contributions 7,000
    Qualifying child care expense 3,700
    Federal income tax withheld 8,000

    $2.49

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