Week 1 Assignment Solution Taxable Income Computation: Married Taxpayers 3-31. Tom and Lindas taxable income is $13,250.

Adjusted gross income Less: Itemized deductions v. $11,600 Less: Personal exemptions (4 $3,700) Taxable income $40,000 11,950 14,800 $13,250

Taxable Income Computation: Single Taxpayer 3-32. Maries taxable income is $49,900. Adjusted gross income Less: Itemized deductions v. $8,500 Less: Personal exemptions (3 $3,700) Taxable income $70,000 9,000 11,100 $49,900

Taxable Income: Standard DeductionDependents 3-36. Stanleys taxable income is $1,700. Adjusted gross income $3,000 Less: Standard deduction (earned income + $300) 1,300 Taxable income $1,700 If Stanley is age 16, $1,600 will be taxed at his marginal rate of 10 percent and $100 (net unearned income ($2,000 $950 $950)) will be taxed at his parents marginal rate. Installment Sales: Installment Plans 13-55. Mr. Zs gross income for 2011 is $57,850: 2009 50/200 $ 25,000 = 25% $ 25,000 = $ 6,250 2010 81/300 $ 80,000 = 27% $ 80,000 = 21,600 011 96/400 $125,000 = 24% $125,000 = 30,000 $57,850 Comprehensive ProblemAccounting Methods: Cash-Basis Taxpayers

13- 69 a. Gross income $700, constructive receipt. b. Deductible because mailed by year-end and subsequently cashed. c. Gross income when received, even though a prepayment because Bill is on the cash basis. d. Gross income, constructive receipt. e. Prepayment of rent is gross income. f. Deductible, even though paid with borrowed funds. g. Not gross income until collected.