Ac553 Homework2 Essay

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HomeworkSolutions Problem425 Billy Week#2 Dent has the following rental income: (1) Rent received in January 2008, but due in December 2007. . . . . . . . . . . . $5,000 (2) Rent received in December 2008, not due until January 2009 . . . . . . . . . . 4,000 Total rental income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . $9,000 (The security deposit is not considered income because it is refundable.) Problem432 Property transferred pursuant to a divorce decree does not give rise to income for tax purposes. Therefore: (a) does not generate income (b) is not treated as alimony, because the house payments do not end on death (c) generates a tax deduction of $1,500 per month for Arnold and income to Barbara of $1,500 per month. The child support portion of the payment is not tax deductible nor is it included in the gross income of the recipient. Problem438 Salary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $45,000 Interest on bank accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 800 Dividends . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500 Rental income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000 Rental income (December and January) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500 Gross income . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $49,800 Less: Itemized deductions . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12,000) $37,800 Less: Exemptions (3 $3,650) . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . (10,950) Taxable income . . . . . . . . . .

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