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Filing Status. For the following independent situations, determine the filing status for the years in question.
a. Wayne and Celia had been married for 24 years before Wayne died in an accident in 2017. Celia and her son, Wally, age 21 in 2017, continued to live at home in 2017, 2018, 2019, and 2020. Wally worked part-time (earning $5,000 in each of the four years) and attended the university on a part-time basis. Celia provided more than 50% of Wally’s support for all four years. What is Celia’s filing status for 2017, 2018, 2019, and 2020?
b. Juanita is a single parent who maintained a household for her unmarried son Josh, age 19. Josh worked full-time and earned $16,000. Juanita provided approximately 40% of Josh’s support but provided all the expenses of maintaining the household. What is Juanita’s filing status?
c. Gomer and Gertrude are married and have one dependent son. In April, Gomer left Gertrude a note informing her that he needed his freedom and he was leaving her. As of December, Gertrude had not seen nor heard a word from Gomer since April. Gertrude fully supported her son and completely maintained the household. What is Gertrude’s filing status assuming she was still legally married?

Itemized versus Standard Deduction . Jan, a single taxpayer,
has adjusted gross income of $250,000, medical expenses of $10,000, home
mortgage interest of $3,000, and property taxes of $2,000. Should she itemize
or claim the standard deduction?

1.Kiddie Tax. Lucy is 17 years old and a dependent of her
parents. She receives $9,000 of wages from a part-time job and $10,400 of
taxable interest from bonds she inherited. Determine Lucy’s taxable income and
tax.
2. Child Credit. Lana, an unmarried taxpayer with AGI of
$204, 400, claims three dependent children, all under age 17. What is the
amount of her child credit?

Computation of Additional Tax Due or Refund. John and
Georgia are married, file jointly, and have three dependents (qualifying
children ages 13, 16, and 18). They have salaries of $130,000, a capital loss
of $8,000, and tax-exempt interest income of $1,000. They paid home mortgage
interest of $10,000, state income taxes of $4,000, property taxes of $2,800,
medical expenses of $3,000, and charitable contributions of $5,000. Federal income
taxes of $11,000 were withheld from their paychecks. Compute the additional tax
due or refund they have when filing their tax return.

Kiddie Tax. Mike and Linda are a married couple who file
jointly. They have three dependent children who are full-time students in 2019.
Mike and Linda provided $8,000 of support for each child. Information for each
child is as follows:
Compute each child’s tax, assuming the interest income is
taxable.

Computation of Tax. Georgia, a single taxpa yer, operates a
business that produces $100,000 of income before any amounts are paid to her.
She has no dependents and no other income. She has itemized deductions of
$18,000 . Compute the total income tax chat would be paid assuming the
following additional facts. Ignore payroll taxes.
a. Georgia operates the business as an S corporation
receiving a salary from the corporation of $70,000 . The corporation
distributes all of its remaining income to the shareholders.
b. She operates the business as a C corporation receiving a
salary from the corporation of $70,000. The corporation distributes its after
tax income to her as a dividend.
c. How would the total tax change in each of the first two
requirements if the corpora – tion made no payments to the owner other than the
salary?

Capital Gains and Losses. Bob and Anna are in the 37% tax
bracket for ordinary income and the 20% bracket for capital gains (ignore the
3.8% additional tax on investment income for higher-income taxpayers.) They
have owned several blocks of stock for many years. They are considering the
sale of two blocks of stock. The sale of one block would produce a gain of
$10,000. The sale of the other would produce a loss of $15,000. For purposes of
chis problem, ignore any restrictions on deductions or credits based on AGL
They have no ocher gains or losses chis year.
a. How much tax will they save if they sell the block of
stock that produces a loss?
b. How much additional tax will they pay if they sell the
block of stock that produces a gain?
c. What will be the impact on their taxes if they sell both
blocks of stock?

Computation of Tax. Maria is a single taxpayer. Her salary
is $51,000 . Mar ia realized a short-term capital loss of $5,000 . Her itemized
deductions tota l $4,000 .
a. Compute Maria’s adjusted gross income.
b. Compute her taxab le income.
c. Compute her tax liability.

Income Shifti ng and Kidd ie Tax. Ralph and Tina are
married, file jointly, and have $500,000 of taxable income. They transfer
ownership of corporate bonds to Pam, their single, dependent daughter . Pam’s
only gross income for the current year is the $14,000 of interest on the
corporate bonds. In each of the following cases, determine the amount of tax
the family saves in the current year because Pam owns the bonds rather than
Ralph and Tina.
a. Pam is age 12.
b. Pam is age 25.

Filing Status. Gail and her husband have a son when her
husband dies unexpected ly on January 1, 2019 . Gail asks you, her tax
professional, how her husband’s death affects her taxes. Determine Gail’s
income tax each year from 2019 through 2023, assuming her only income is her
$150,000 annua l salary, her itemized deductions are $24,000 annually, and she
has nor remarried. Assume also that the tax rate schedules and standard
deduction amounts for 2019 also apply in subsequent years.
a. The son was born on April 15, 2006, is Gail’s dependent
each year, and lives with Gail for all of each year.
b. The son was born on April 15, 1995, is not Gail’s
dependent each year, and lives with Gail for all of each year.