ACC AGI Calculation

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39. David is a college professor who does some consulting work on the side. He uses 25% of his home exclusively for the consulting practice. He is single and 63 years old. His AGI (without consideration of consulting income) is $45,000. Other informationfollows:

Income from consulting business             $4,000
Consulting expenses other than home office             1,500
Total costs relating to home:  
Interest and taxes             6,500
Utilities             1,500
Maintenance and repairs             450
Depreciation (business part only)             1,500

 

Calculate David’s AGI:

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51.  Jose purchased a vehicle for business and personal use. In 2013 he used the vehicle 18,000 miles (80%) for business and calculated his vehicle expenses using the standard mileage rate (mileage was incurred ratably throughout the year). He paid $1,400 in interest and $150 in property taxes on the car. Calculate the total business deduction related to the car:

 

53. Derrick owns a farm in eastern North Carolina. A hurricane hit the area and destroyed a farm building and some farm equipment and damaged a barn.

 

Item Adjusted basis FMV before damage FMV after damage Insurance proceeds
Building $85,000 $115,000 $0 $55,000
Equipment 68,000 49,000 0 15,000
Barn 95,000 145,000 95,000 35,000

 

Due to the extensive damage throughout the area, the president of the United States declared all areas affected by the hurricane as a disaster area. Derrick, who files a joint return withhis wife, had $45,000 of taxable income last year. Their taxable income for thecurrent year is $150,000, excluding the loss from the hurricane. Calculate the amount of the loss deductible by Derrick and his wife and the years in which they should deduct the loss.

(Hint: Chapter 5 providesinformation concerning nationally declared disaster areas.)

55.  Eric, who is single, participates in an activity that is appropriately classified as a hobby. The activity produces the following revenue and expenses:

 

 

Revenue $12,000
Property taxes 2,000
Materials and supplies 4,000
Utilities 1,500
Advertising 1,900
Insurance 775
Depreciation 5,000

Without regard to thisactivity, Eric’s AGI is $55,000. Determine how much income Eric must report, the amount of the expenses he is permitted to deduct, and his AGI:

56. In 2013 Landon has self-employment earnings of $195,000. Compute Landon’s self-employment tax liability and the allowable income tax deduction of the self-employment tax paid.

SE tax:_______________________

SE deduction: __________________________

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