Question

Dan and Maureen file a joint income tax return for 2019. They have two dependent children, ages 7 and 9. Together they earn wages of $830,000. They also receive taxable interest income of $8,000 and interest on City of Los Angeles bonds of $78,000. During 2019, they received a state income tax refund of $3,000 relating to their 2018 state income tax return on which they itemized deductions. Their expenses for the year consist of the following:

Home mortgage interest (on acquisition debt) $ 19,000

Interest on credit cards 2,000

Real property taxes 8,300

Cash charitable contributions 75,000

State income taxes withheld 48,000

Instructions: Calculate Dan and Maureen's tentative minimum tax liability assuming an AMT exemption amount of $111,700, before any phase-outs. Show your calculations.

Answer 1

descripation	balances
1 . earnings for wages intrest income los angeles bonds income tax refund   2. DEDUCATION : mortage intrest intrest on credit cards propery taxes cash contribution total:	$ 8,30000 $8000 $78000 $ 3000 $19,000 $2000 $8,300 $75000 $ 8,14700

2. INCOME TAX FOR 2018 : The tax rate is 37%

more than $ 600000

161379.1 37% on excess

3. daily taxes : $ 245519 - all taxes

$ 245519 - 48000

taxes = $ 195519

4. daily taxes income : 814700

(-) adjustments :

mortage intrest = 19000

amount = (81470, 19000 = 795700)

(+) cash contribution : 75000

total = (795700+75000 =870700)

5. ecomptions : phase 109400

amount = $ 761300

6. income amount rates :   

income = 761300

upto $ 191500@ 265% =49750

166908= $ 216698

• points : property taxes not allowed
• cash contribution is considered as the persaonal charity