Question

Lin Lee, a single, self-employed investment counselor who also owns a rental property. This year, she collected $85,000 in fees and paid the following business and personal expenses

Expenses below:
Health insurance premiums (not through an exchange)	$	4,200
Life insurance premiums (whole life)	$	1,900
Books on investing	$	200
Repairs of the rental property	$	450
Advertising for investment clients	$	1,770
State income taxes	$	4,300
Self-employment tax (hint: half is employer share)	$	11,732
Marketing Lunch and Dinners with potential clients	$	500

Home mortgage interest (acquisition debt of $300,000)	$16,640
Real estate taxes	$5,400
State income taxes paid	6,300
Medical expenses (unreimbursed)	1,800
Employee business expenses (unreimbursed)	450
Charitable contributions (cash to their church)	760

Calculate Lin Lee’s taxable income. Show your work.

Answer 1