Question

R and J were married in 2007. They have a five year old child and a son born December 16, 2018. R’s 67 year old father lived in a nursing home until his death on March 4, 2018. R and J provided all of his support until his death. R earned $43,000 in salary during the year. They also had $2,100 in interest from the credit union. They incurred $7,800 in itemized deductions during the year. Compute their taxable income and their tax for 2018.

2. Stanley Strummer had the following items on his timely filed 2018 income tax return: Gross receipts $1,000,000 Cost of goods sold ($750,000) Capital gain $50,000 Capital loss ($75,000) Stanley inadvertently omitted some income on his 2018 return. What is the statute of limitations if he omitted $300,000 income on the return? What if he omitted $250,000 income?

Answer 1

Part A Age is More then 67 year
Wages		43000
Interest income		2100
Gross total income		45100
Less:
Standard deduction	13850
Personal exemption	20250	34100
Taxable income		11000
Tax rate		0.1
Tax payable		1100

Part B

25 percent of gross income of $1,050,000 ($1,000,000 +

$50,000) is $262,500. If Stanley omitted $300,000

income which is greater than $262,500, the statute of limitation would be six years. If Stanley omitted

$250,000 income which is less than $262,500, the statute of limitation would be three years.