Question

During 2019, Sara, a single taxpayer (divorced in 2018), reported the following items of income and...

During 2019, Sara, a single taxpayer (divorced in 2018), reported the following items of income and expenses:

Income:

Salary = $84,000

Dividend income= $800

Bank account interest = $150

Capital gain on stock owned less than one year = $3,000

Revenue from sole proprietorship business (jewelry sales)= $14,500

Expenses/losses:

Alimony paid= $12,000

Interest on principal residence= $8,000

Real estate taxes on principal residence= $2,000

Capital loss on stock owned less than one year = $8,000

Expenses related to sole proprietorship:

Rent= $6,000

Supplies = $2,400

Legal fees= $700

Depreciation= $1,200

Compute Sara’s taxable income and type your answer in the text box. Show support for your work on your scratch paper in order to earn credit.

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Answer #1
Calculation of Sara Taxable Income
Salary 84000.00
Bank Account Interest 150.00
Dividend Income 800.00
Short term capital gain on Stock 3000.00
Short term capital loss on Stock (8000.00)
Net Capital Gain (5000.00)
Revenue from Jewllery business 14500.00
less Rent (6000.00)
Less supplies (2400.00)
Less Legal Fees (700.00)
Less Depreciation (1200.00)
Net Business Income 4200.00
Alimony Paid (12000.00)
Adjusted Total Income 72150.00
Less itemised deductions
Interest on residence (8000.00)
Real estate tax on residence (2000.00) (10000.00)
Taxable Income 62150.00
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