Question

Matt and Connie are married and file a joint tax return. Matt earns $80,000 as a financial planner, while Connie earns $85,000 as an accountant. • They received $400 of interest income from a money market fund and $250 of interest income from municipal bonds. • They sold stock they had owned for six years at a $7,500 gain and they received a gift from Matt's parents of $10,000.

• What is their gross income for the year?

– Includes:

– Excludes:

• What is their gross income if they also sold stock they had
owned for 2 years at a $7,000 loss?
– Net capital gain/loss: =
– GI Includes:

• What is their gross income if they also sold stock they had
owned for 2 years at a $12,500 loss?
– Net capital gain/loss:
––GI Includes:

Answer 1

1) ?Gross Income of the year

Includes : Salary, Interest Income, capital gain

Excludes : Gift, Stock

Gross Income = 80,000 + 85,000 + 400 + 250 + 7,500

= 173,150 $

2)

Net Capital Gain/Loss = 7,500 - 7,000

= 500 $

Gross Income Includes = Salary, Interest Income, capital gain/loss

Gross Income = 80,000 + 85,000 + 400 + 250 + 7,500 - 7000

= 166,150 $

3)

Net capital gain/loss = 7,500 - 7,000 - 12,500

Net Capital loss = (12,000)

Gross Income Includes = Salary, Interest Income, capital gain/loss

Gross income = 80,000 + 85,000 + 400 + 250 + 7,500 - 7000 - 12,500

= 153,650

Gross income is an individual's income and receipts from nearly all sources. It is the starting point for determining the taxes that individual will pay. Sources of gross income or pay include salary, wages, tips, capital gains, dividends, interest, rents, pensions and alimony.