Carmin Kovach is single and has two children from her previous marriage. Anika,<\/p>\n
9, lives with Carmin. Julius, 11, lives with his father, Ray. Carmin pays alimony of<\/p>\n
$400 per month to Ray. The payments are to continue until Julius reaches age 18,<\/p>\n
when they will be reduced to $100.<\/p>\n
Carmin is 34 and employed as a nuclear engineer with Atom Systems Consultants,<\/p>\n
Inc. (ASCI). Her annual salary is $80,000, and ASCI has an extensive fringe<\/p>\n
benefits program for its employees.<\/p>\n
ASCI has a qualified pension plan that covers all employees. Under the plan,<\/p>\n
ASCI matches any contribution to the plan up to 8% of the employee\u2019s annual salary.<\/p>\n
Carmin makes the maximum allowable contribution of $6,400, and it is<\/p>\n
matched by ASCI.<\/p>\n
ASCI provides medical coverage to all employees but not to their dependents.<\/p>\n
Carmin\u2019s medical coverage costs ASCI $3,000 during the current year. She<\/p>\n
receives $980 in reimbursements for her medical costs. ASCI also provides employees<\/p>\n
with a flexible benefits plan. Carmin pays $2,500 into the plan. She uses<\/p>\n
$2,400 to purchase medical coverage for Anika. Her medical, dental, and optometry<\/p>\n
costs not covered by insurance total $1,900; the flexible benefits plan reimburses<\/p>\n
her $100 for these costs.<\/p>\n
ASCI also provides employees with group term life insurance of twice their annual<\/p>\n
salary, up to a maximum coverage of $150,000. Carmin\u2019s group term life insurance<\/p>\n
premiums cost $400. Because of the sensitive and sometimes dangerous<\/p>\n
nature of her work, ASCI also provides Carmin with a $300,000 whole life insurance<\/p>\n
policy. The whole life insurance policy costs $490.<\/p>\n
Taking advantage of ASCI\u2019s educational assistance program, during the fall<\/p>\n
Carmin enrolls in two law school classes at a local university. ASCI pays her tuition,<\/p>\n
fees, books, and other course-related costs totaling $2,300.<\/p>\n
Carmin also receives certain other fringe benefits not available to all employees.<\/p>\n
She receives free parking in the company\u2019s security garage that would normally<\/p>\n
cost $280 per month. In addition, ASCI pays the $1,000 cost of her nuclear engineer\u2019s<\/p>\n
license and $600 per year in professional association dues and professional<\/p>\n
magazine subscriptions. ASCI also pays Carmin\u2019s $900 dues to a health club that is<\/p>\n
located in the same building as her office.<\/p>\n
Carmin routinely enters sweepstakes contests. This year, she is notified that<\/p>\n
she has won $5,000 in a breakfast cereal promotion. The prize is to be paid equally<\/p>\n
over 10 years. She receives the first payment December 28, although she doesn\u2019t<\/p>\n
deposit the check in her checking account until January 3.<\/p>\n
In February, Carmin\u2019s father dies. Social Security pays her $600 as a survivor\u2019s<\/p>\n
benefit. She also receives stock valued at $30,000 and her father\u2019s house, which<\/p>\n
has a value of $90,000, as her share of her father\u2019s estate.<\/p>\n
Carmin rents out her father\u2019s house on August 1. The monthly rent is $400,<\/p>\n
and the lease agreement is for one year. The lease requires the tenant to pay the first<\/p>\n
and last months\u2019 rent and a $400 security deposit. The security deposit is to be<\/p>\n
returned at the end of the lease if the property is in good condition. On August 1,<\/p>\n
Carmin receives $1,200 from the tenant per the terms of the lease agreement. In<\/p>\n
November, the plumbing freezes and several lines burst. The tenant has the repairs<\/p>\n
made and pays the $300 bill. In December, he reduces his rental payment to $100<\/p>\n
to compensate for the plumbing repairs. Carmin pays other deductible costs for the<\/p>\n
rental that total $2,680. The allowable depreciation on the rental house is $1,080.<\/p>\n
Carmin owns several other investments. She receives the following amounts<\/p>\n
(all in cash) from the stocks and bonds she owns:<\/p>\n
General Dynamics common stock $ 300<\/p>\n
City of Toronto bonds 1,600<\/p>\n
State of Nebraska bonds 400<\/p>\n
New Jersey economic development bonds 300<\/p>\n
Grubstake Mining Development stock 1,000<\/p>\n
Carmin owns 1,000 shares of Grubstake Mining Development common stock.<\/p>\n
Grubstake is organized as an S corporation and has 100,000 shares outstanding.<\/p>\n
Grubstake reports taxable income of $200,000 during the current year.<\/p>\n
Carmin sells the following securities during 2013:<\/p>\n
Security Sale Date<\/p>\n
Purchase<\/p>\n
Date<\/p>\n
Sale<\/p>\n
Price<\/p>\n
Commission<\/p>\n
Paid Basis<\/p>\n
Nebraska Bonds 3\/14\/13 10\/22\/10 $1,900 $ 80 $1,710<\/p>\n
Cassill Corporation<\/p>\n
Stock<\/p>\n
10\/18\/13 2\/19\/13 $8,900 $450 $9,630<\/p>\n
Carmin purchased 500 shares of General Dynamics stock on July 22, 2010, at<\/p>\n
a cost of $2,200. On June 15, 2013, she receives 50 shares of General Dynamics<\/p>\n
stock as a dividend. The fair market value of General Dynamics stock on June 15,<\/p>\n
2013, was $3.50 per share.<\/p>\n
Carmin slips on a wet spot in front of a computer store during the current<\/p>\n
year. She breaks her ankle and is unable to work for two weeks. She incurs $1,300<\/p>\n
in medical costs, all of which are paid by the owner of the store. The store also<\/p>\n
gives her $1,000 for pain and suffering resulting from the injury. ASCI continues<\/p>\n
to pay her salary during the two weeks she misses because of the accident. ASCI\u2019s<\/p>\n
plan also pays her $1,200 in disability pay for the time she is unable to work.<\/p>\n
Calculate Carmin\u2019s adjusted gross income on her 2013 tax return. Then do<\/p>\n
one or both of the following, according to your professor\u2019s instructions:<\/p>\n
a. Include a brief explanation of how you determined each item that affected<\/p>\n
adjusted gross income and any items you excluded from gross income. Your<\/p>\n
solution to the problem should contain a list of each item included in adjusted<\/p>\n
gross income and its amount, with the explanations attached.<\/p>\n
b. Write a letter to Carmin explaining how you determined each item that<\/p>\n
affected adjusted gross income and any items you excluded from gross income.<\/p>\n
You should include a list of each item included in adjusted gross income and<\/p>\n
its amount.<\/p>\n
MUST BE IN EXCEL AND EXCEL MUST BE USED CORRECTLY<\/p>\n","protected":false},"excerpt":{"rendered":"
Carmin Kovach is single and has two children from her previous marriage. Anika, 9, lives with Carmin. Julius, 11, lives with his father, Ray. Carmin pays alimony of $400 per month to Ray. The payments are to continue until Julius Read More …<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-51041","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/51041","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/comments?post=51041"}],"version-history":[{"count":0,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/51041\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/media?parent=51041"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/categories?post=51041"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/tags?post=51041"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}