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Tax Liability, AGI, and Capital Transactions

Please see the attached document.

1- Emma had the following transactions for 2012:
Salary $80,000
Alimony received 4,000
Recovery from car accident --
Personal injury damages $40,000
Punitive damage 70,000 110,000
Gift from parents 20,000
Property sales --
Loss sale of boat (used for pleasure and owned 4 years) ($ 4,000)
Gain on sale of ADM stock(held for 10 month as an investment) 4,000 (-0-)

What is Emma's AGI for 2012?

2- During 2012, Addison has the following gains and losses:

LTCG $10,000
LTCL 3,000
STCG 2,000
STCG 7,000

A) How much is Addison's tax liability if she is in the 15% tax bracket?
B) If her tax bracket is 33% (not 15%)?

3 - During 2012, Madison has salary income of $80,000 and the following capital transactions:
LTCG $13,000
LTCL 15,000
STCG 13,000
STCG 6,000

How are these transactions handled for income tax purposes?

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1- Emma had the following transactions for 2012:
Salary $80,000
Alimony received 4,000
Recovery from car accident --
Personal injury damages $40,000
Punitive damage 70,000 110,000
Gift from parents ...

Solution Summary

This solution calculates Emma's AGI for 2012. Addison's tax liability in various tax brackets is also calculated, and Madison's transactions for income tax purposes is also thoroughly explained.

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