# Acc 547

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Week 3 Problem Solution Set
Temitope Ajimotokan
Accounting/547
September 22th, 2012
Christopher De Maline
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Comprehensive Problem 67 (Ch. 5)
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a. illegal income = \$1,200 (Gross income includes income from all sources either legal or illegal.
b. Gain on stock sale = (32 x \$1,000) - (31 x \$1,000)
* = \$32,000 - \$31,000
* = \$1,000
c. Annuity = \$25,000 - \$210,000/20)
* = \$25,000 - \$10,500
* = \$14,500
d. Disability benefits are excluded because the taxpayer purchased the policy.
e. Foreign-earned income = \$91,500 x 181/365
* = \$91,500 x 0.496
* = \$45,384 (maximum exclusion) \$18,000 excluded
f. Scholarship = \$200 (The \$200 used towards car payment does not qualify for exclusion; the \$300 used for books may be excluded).
g. Paycheck from son = \$0 (Under assignment of income doctrine, the income is taxed to the taxpayer who earned the income.
h. State income tax refund = \$50
i. Interest income = \$30,000 ( included in gross income )
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* Gross income = \$46,950
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* State Tax Refund/Tax Benefit Rule
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1. temized deductions with \$610 overpayment = \$5,750
2. 2009 Standard deduction = \$5,700 (Single filing status)
3. Reduction in taxable income with \$610 overpayment   = \$5,750 (greater of (1) and (2)
4. Itemized deductions without the \$610 overpayment that was refunded
* = \$5,750 - \$610
* = \$5,140
5. Reduction in taxable income without the \$610 overpayment that was refunded
* = \$5,700 ( greater of (2) and (4)
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* Tax benefit from prior year \$610 overpayment of state taxes
* = \$5,750 - \$\$5,700
* = \$50
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Comprehensive Problem 66 (Ch. 6)...