Question

Daniel, age 38, is single and has the following income and expenses in 2018:Salary income $60,000Net rent income 6,000Dividend income 3,500Payment of alimony in accordance with the separation agreement which was signed in 2018 12,000Mortgage interest on residence 9,900Property tax on residence 1,200Contribution to traditional IRA (assume the amount is fully deductible) 5,000Contribution to United Church 2,100Loss on the sale of real estate (held for investment) 2,000Medical expenses 3,250State income tax 300Federal income tax 7,0001) What is Daniel's gross income?2) What is Daniel's AGI?3) What is Daniel's Total itemized deductions (after any limitations)? This is all for 2018.

Answer 1

Step-by-step explanation:

Payment of Alimony ⇒ Deductible For AGI

Mortgage interest on residence ⇒ Deductible From AGI

Property Tax on Residence ⇒ Deductible From AGI

Contribution to traditional IRA ⇒ Deductible For AGI

Contribution to United Church ⇒ Deductible From AGI

Loss on sale of real estate ⇒ Deductible For AGI

Medical Expenses ⇒ Deductible From AGI

State Income Tax ⇒ Deductible From AGI

Federal Income Tax ⇒ Not Deductible

∴Gross Income:

Salary Income 60,000

Net Rent 6,000

Dividend Income 3,500 69,500

∴Deduction for AGI:

Payment of Alimony 12,000

Contribution to traditional IRA 5,000

Loss on sale of real estate 2,000 19,000

Adjusted Gross Income 50,500

∴ Itemized Deduction

Mortgage interest on residence 4,900

Property Tax on Residence 1,200

Contribution to United Church 2,100

State Income Tax 300

Medical Expenses[$3250 - ($50500× 7.50%)] ----

∴Total Itemized Deduction 8,500