Comprehenive Problems Week 3 Essay

1748 Words Nov 5th, 2012 7 Pages
Week 3 individual assignment

Comprehensive problem 67

Ken is 63 years old and unmarried. He retired at age 55 when he sold his business, understock.com. Though Ken is retired, he is still very active. Ken reported the following financial information this year. Assume Ken’s modified adjusted gross income for purposes of the bond interest exclusion and for determining the taxability of his Social Security benefits is $70,000 and that Ken files as a single taxpayer. Determine Ken’s 2009 gross income.

a. Ken won $1,200 in an illegal game of poker (the game was played in Utah, where gambling is illegal).

b. Ken sold 1,000 shares of stock for $32 a share. He inherited the stock two years ago. His tax basis (or investment) in the
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The Johnson’s new home was only ten miles from the ST store. However, it was 50 miles from their former residence. The Johnsons paid a moving company $2,000 to move their possessions to the new location. They also drove the 50 miles to their new residence. They stopped along the way for lunch and spent $60 eating at Denny’s. None of the moving expenses were reimbursed by ST.

f. Jeremy paid $4,500 for health insurance coverage for himself. Alyssa was covered by health plans provided by her employer, but Jeremy is not eligible for the plan until next year.

g. Jeremy paid $2,500 in self-employment taxes.

h. Alyssa contributed $4,000 to ST’s employer-provided traditional 401k plan.

i. Jeremy paid $5,000 in alimony and $3,000 in child support from his prior marriage.

j. Alyssa paid $3,100 of tuition and fees to attend night classes at a local university. The Johnsons would like to deduct as much of this expenditure as possible rather than claim a credit.

k. The Johnsons donated $2,000 to their favorite charity

The calculation for the Johnson family’s AGI is as follows: $255,000 - $40,000 - $45,000 - $18,000 - $8,500 - $2,000 They will be allowed to take $12 for the mileage but can’t take the deduction for the meals on the road) - $4,500 - $1,250 - $4,000 (Any contributions that are made to the 401k would be taken from AGI and not put towards the AGI) -

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