Question

# Individual Tax Computation. Richard Hartman, age 29, single with no dependents, with a salary of \$32,270....

Individual Tax Computation. Richard Hartman, age 29, single with no dependents, with a salary of \$32,270. During the year, he received \$1,300 interest income from a savings account and a \$1,500 gift from his grandmother. At the advice of his father, Richard sold stock he had held as an investment for five years, for a \$3,000 gain. He also sustained a loss of \$1,000 from the sale of land held as an investment and owned for four months. Richard had itemized deductions of \$6,250. Compute the following for Richard for both 2017 and 2018, assuming the facts are identical in both years:

Find:

a. Gross income

b. Adjusted gross income

c. Taxable income

d. Income tax before credits and prepayments

e. Income tax savings that would result if Richard made a deductible \$5,000 contribution to a qualified Individual Retirement Account

a).Computation of Gross total Income For PY 2016-17

A)Income from salaries : \$32,270

B) Income from Capital Gain:

i) Long term capital gain : \$3,000

ii)Short term capital loss : \$ 1,000

C) Income from other sources : \$1,300

Gross total income : \$37,570.

b)Adjusted Gross total Income:Gross total income-Short term capital loss/gain u/s 111A -Deductions u/s chapterVI A other than 80G.

\$37,750-\$6250

Adjusted Gross Total Income=\$31,320

c) Taxable income :

Gross total Income : \$ 37,750

Deductions u/s Chapter VIA : \$6,250

Set off short term capital loss : \$1000

Taxable income : \$30,320

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