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22 Jul 2018

X Corporation owns real and personal property in New York. Under New York law, X is liable for taxes on real property on the first day of any payment date if it owns real property in the state. The dates are 2/1, 5/1, 8/1, 11/1. For 20X7 the amounts due on each date are $300. Under New York law, a taxpayer is liable for personal property taxes on property held on the first day of the year, payable 60% on July 1 following, and 40% on the 1st day of February of the succeeding year. For 20X7, X pays $300 on 11/1/X7 for the last quarter real estate taxes, and $6,000 of personal property taxes on 7/1/X7. The remaining $4,000 of personal property taxes are paid on 2/1/X8. When may these taxes be deducted?

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Casey Durgan
Casey DurganLv2
25 Jul 2018

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Amber & Bryan (both age 45), are married and file a joing tax return. 2017 income includes:

1. Salary of $200,000

2. Amber was in a car accident and received compensatory damages of $25,000 for broken nose.

3. Amber also received punitive damages of $15,000; the person who hit her car was intoxicated

4. interest income from Disney bonds in the amount of $1,000

5. refund of 2016 NJ IncomeTaxes of $2,000 (the couple itemized their deductions in 2016; itemized deductions exceeded the standard deduction by $5,000)

Amber and Bryan also incurred and paid the following expenses during the year:

6. Medical expenses: $7,000

7. Parking tickets $300

8. Alimony (Bryan was previously married and pays Alimony to his ex-wife): $12,000

9. Legal fees associated with divorce proceedings- not tax related: $4,000

10. Charitable contributions- paid on 12/30/17: $2,000

11. Casualty loss (after $100 floor, but before any further limitations) $1,000

12. Mortgage payment on principal residence: principal only: $10,000

13. Mortgage payment on principal residence: interest expense: $14,500

14. Property taxes (real estate taxes) on personal residence: $4,200

15. Nephew, Gerardo, owns a home and could not make his property tax payment as he is unemployed. Amber paid Gerardo's property taxes (real estate taxes): $3,000

16. Federal income tax withheld: $18,000

17. Qualified Moving expenses in conjuction with a new job: $2,000

18. Contribution to a traditional IRA: $4,000

19. Cost of new roof on personal residence: $14,000

20. NJ income tax withheld: $1,300

A. Identify items 1-5 as taxable or not taxable. Identify items 6-20 as a deduction for AGI, deduction from AGI, or not deductible. Give a sentence or two explaining limitations, rules, etc for the following items: 5, 6, 10, 11, 15,19

B. Use the tax formula to provide a detailed calculation of the couple's 2017 taxable income. Be sure to compare the standard deduction amount to total itemized deductions.

Amber & Bryan (both age 45), are married and file a joing tax return. 2017 income includes:

1. Salary of $200,000

2. Amber was in a car accident and received compensatory damages of $25,000 for broken nose.

3. Amber also received punitive damages of $15,000; the person who hit her car was intoxicated

4. interest income from Disney bonds in the amount of $1,000

5. refund of 2016 NJ IncomeTaxes of $2,000 (the couple itemized their deductions in 2016; itemized deductions exceeded the standard deduction by $5,000)

Amber and Bryan also incurred and paid the following expenses during the year:

6. Medical expenses: $7,000

7. Parking tickets $300

8. Alimony (Bryan was previously married and pays Alimony to his ex-wife): $12,000

9. Legal fees associated with divorce proceedings- not tax related: $4,000

10. Charitable contributions- paid on 12/30/17: $2,000

11. Casualty loss (after $100 floor, but before any further limitations) $1,000

12. Mortgage payment on principal residence: principal only: $10,000

13. Mortgage payment on principal residence: interest expense: $14,500

14. Property taxes (real estate taxes) on personal residence: $4,200

15. Nephew, Gerardo, owns a home and could not make his property tax payment as he is unemployed. Amber paid Gerardo's property taxes (real estate taxes): $3,000

16. Federal income tax withheld: $18,000

17. Qualified Moving expenses in conjuction with a new job: $2,000

18. Contribution to a traditional IRA: $4,000

19. Cost of new roof on personal residence: $14,000

20. NJ income tax withheld: $1,300

A. Identify items 1-5 as taxable or not taxable. Identify items 6-20 as a deduction for AGI, deduction from AGI, or not deductible. Give a sentence or two explaining limitations, rules, etc for the following items: 5, 6, 10, 11, 15,19

B. Use the tax formula to provide a detailed calculation of the couple's 2017 taxable income. Be sure to compare the standard deduction amount to total itemized deductions.

2. Steve Pratt, who is single, purchased a homein Spokane, Washington, for $615,000. He moved into the home onFebruary 1 of year 1. He lived in the home as his primary residenceuntil June 30 of year 5, when he sold the home for $912,500.(Leave no answer blank. Enter zero ifapplicable.)

a. What amount of gain will Steve be requiredto recognize on the sale of the home?

Recognized gain on sale

?

b. Assume the original facts, except that thehome is Steve’s vacation home and he vacations there four monthseach year. Steve does not ever rent the home to others. What gainmust Steve recognize on the home sale?

Recognized gain on sale

?

c. Assume the original facts, except that Stevemarried Stephanie on February 1 of year 3 and the couple lived inthe home until they sold it in June of year 5. Under state law,Steve owned the home by himself. How much gain must Steve andStephanie recognize on the sale (assume they file a joint return inyear 5).

Recognized gain on sale

?

5. In year 1, Peter and Shaline Johnsen movedinto a home in a new subdivision. Theirs was one of the first homesin the subdivision. In year 1, they paid $4,100 in real propertytaxes to the state government, $1,200 to the developer of thesubdivision for an assessment to pay for the sidewalks, and $890for real property taxes on land they hold as an investment. Whatamount of property taxes are the Johnsens allowed to deductassuming their itemized deductions exceed the standard deductionamount before considering any property tax deductions?

Deductible tax amount

?

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