IncomeProfileAdjusted BudgetEmployment IncomeInterest/DividendsOtherTOTAL INCOMEEssential ExpensesMortgage/RentUtilitiesTelephoneGroceriesChild CarePet CareClothingTransportationGas/FuelInsuranceHealth club duesLife InsuranceMedicineVeterinarianSavingsNon-Essential ExpensesEntertainmentDining OutVacationSubscriptionsOtherTOTAL ExpensesSurplus/Shortage Read the case study below:Jacob is 68 years old and retired. He receives Canada Pension Plan payment$848/mth and he also receives Old Age Security $484/mth.Jacob owns his home but must pay property tax of $3000 annually. Jacob hires alandscape company to mow his lawn and tend to his late wife's gardens. He paysthem $100 each week from May to September. Jacob also hires a neighborhoodteenager to shovel his driveway in the winter months, paying $30 each time.Jacob's wife died last year and Jacob is still paying off the loan he needed to coverlegal fees and burial fees. Jacob pays $100/mth for 6 more payments. Since hiswife's death Jacob receives a Survivor Benefit of $100/mth.Jacob enjoys golfing (annual club member of $500) and bowling (annual leaguemembership of $100). Jacob usually eats out four nights a week spending at least$50.00 at restaurants weekly. He regularly plays cards with his neighborhood,spending approximtely $50 each weekend.Jacob's children live nearby. Jacob tries to keep his late wife's tradition of spoiling thegrandchildren. He tries to spend around $100 for each birthday. Jacob currently hasseven grandchildren. Three of these grandchildren live overseas, so Jacob spendsa conderable amount of money on long distance phone calls.Jacob owns two dogs, Goldie and Ben, who are great company. Ben is an older dog,whose teeth are not healthy. The vetrinarian has told Jacob that Ben will soon needto have his teeth pulled. This procedure will cost approximatley $500, not includingpossible boarding costs. Monthly feeding costs and vet bills usually run about $60.00each month.Highlight important information you can use to create a budget.Use the Budget Template to fill in appropriate dollar amounts.Estimate other income and expenses that could be assumed from this case study.

Income Profile Adjusted Budget Employment Income Payment from pension Canada Pension Plan and Old…

Answered: Highlight important information you can…

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter7: Losses—deductions And Limitations

Section: Chapter Questions

Problem 86TA

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John Benson, age 40, is single. His Social Security number is 111-11-1111, and he resides at 150 Highway 51, Tangipahoa, LA 70465. John has a 5-year-old child, Kendra, who lives with her mother, Katy. As a result of his divorce in 2016, John pays alimony of 6,000 per year to Katy and child support of 12,000. The 12,000 of child support covers 65% of Katys costs of rearing Kendra. Kendras Social Security number is 123-45-6789, and Katys is 123-45-6788. Johns mother, Sally, lived with him until her death in early September 2019. He incurred and paid medical expenses for her of 15,588 and other support payments of 11,000. Sallys only sources of income were 5,500 of interest income on certificates of deposit and 5,600 of Social Security benefits, which she spent on her medical expenses and on maintenance of Johns household. Sallys Social Security number was 123-45-6787. John is employed by the Highway Department of the State of Louisiana in an executive position. His salary is 95,000. The appropriate amounts of Social Security tax and Medicare tax were withheld. In addition, 9,500 was withheld for Federal income taxes and 4,000 was withheld for state income taxes. In addition to his salary, Johns employer provides him with the following fringe benefits. Group term life insurance with a maturity value of 95,000; the cost of the premiums for the employer was 295. Group health insurance plan; Johns employer paid premiums of 5,800 for his coverage. The plan paid 2,600 for Johns medical expenses during the year. Upon the death of his aunt Josie in December 2018, John, her only recognized heir, inherited the following assets. Three months prior to her death, Josie gave John a mountain cabin. Her adjusted basis for the mountain cabin was 120,000, and the fair market value was 195,000. No gift taxes were paid. During the year, John reported the following transactions. On February 1, 2019, he sold for 45,000 Microsoft stock that he inherited from his father four years ago. His fathers adjusted basis was 49,000, and the fair market value at the date of the fathers death was 41,000. The car John inherited from Josie was destroyed in a wreck on October 1, 2019. He had loaned the car to Katy to use for a two-week period while the engine in her car was being replaced. Fortunately, neither Katy nor Kendra was injured. John received insurance proceeds of 16,000, the fair market value of the car on October 1, 2019. On December 28, 2019, John sold the 300 acres of land to his brother, James, for its fair market value of 160,000. James planned on using the land for his dairy farm. Other sources of income for John are: Potential itemized deductions for John, in addition to items already mentioned, are: Part 1Tax Computation Compute Johns net tax payable or refund due for 2019. Part 2Tax Planning Assume that rather than selling the land to James, John is considering leasing it to him for 12,000 annually with the lease beginning on October 1, 2019. James would prepay the lease payments through December 31, 2019. Thereafter, he would make monthly lease payments at the beginning of each month. What effect would this have on Johns 2019 tax liability? What potential problem might John encounter? Write a letter to John in which you advise him of the tax consequences of leasing versus selling. Also prepare a memo addressing these issues for the tax files.
Ellie purchases an insurance policy on her life and names her brother, Jason, as the beneficiary. Ellie pays 32,000 in premiums for the policy during her life. When she dies, Jason collects the insurance proceeds of 500,000. As a result, how much gross income does Jason report?
Malin is a married taxpayer and has three dependent children. Malin's employer offers health insurance for employees and Malin takes advantage of the benefit for her entire family (her spouse's employer also offers health insurance but they opt out). During the year, Malin paid $ 1,200 toward her family's health insurance premiums through payroll deductions while the employer paid the remaining $ 9,200. Malin's family visited health care professionals numerous times during the year and made total copayments toward medical services of $280. Malin's daughter had knee surgery due to a soccer injury and the insurance company paid the hospital $ 6,700$ directly and reimbursed Malin $400 for her out-of-pocket health care expenses related to the surgery. How much gross income should Malin recognize related to her health insurance? $0 $ 9,200 14,020(9,200+6,7001,200280400) 8,000(9,2001,200) None of the above

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Highlight important information you can use to create a budget. Use the Budget Template to fill in appropriate dollar amounts. Estimate other income and expenses that could be assumed from this case study.