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The following information relates to Walter and Skylar White for tax year 2013. Please use this information to provide answers to the questions on the separate page. You will submit the “answer page” only. Walter (51) and Skylar (48) are married and file a joint tax return. Walter is the office manager for an accounting firm and Skylar is the manager of a store in their town. Walter and Skylar have 3 children: Dora (10), Donna (17) and Scott (25) who lived with them all year. Walter and Skylar furnish over 50% of the support for all their children. Dora is in elementary school. Donna is a high school senior. Scott is in graduate school and commutes to classes. Donna earned $4,250 as a waitress and Scott earned $3,300 as a sailing instructor during the summer and $2,500 as a graduate research assistant during the regular school year. Walter and Skylar furnish 60% of the support of Walter’s aunt, Marie, who lived alone in her own residence during the year. Marie provided the rest of her support from her non taxable Social Security benefits and $5,000 of interest from a City of Phoenix, Arizona bond. Marie passed away in May and Walter was the beneficiary on her life insurance policy and received $100,000 in life insurance proceeds on July 5. For 2012, the Whites’ itemized deductions totaled 29,200, which consisted of 5,300 of medical expenses, 6,800 of interest, taxes of 17,100, The Whites had the following income and expenses during the 2013 tax year: ITEM AMOUNT Property taxes $5,000 Interest on home mortgage 6,600 Repairs to the furnace of their home 850 Utilities for their home 3,700 Fire and theft insurance for their home 1,500 Medical insurance premiums 13,500 Doctors for Marie (from 2012 paid in 2013) 2,370 Operation for Marie 21,000 Hospital expenses for Marie 7,700 Vision and medical expenses for the Whites 4,700 Reimbursement from medical insurance (received in 2013 for 2012 expenses) 5,600 Additional state income tax paid when return filed 1,500 Tickets to fashion show for the Youth Association (qualified charitable organization) comparable cost would be $75. 250 Contribution to Catholic Church 6,000 Used clothing to Salvation Army (cost $1,600) FMV $440 Received interest income from National Bank 1,740 Uniforms for Skylar (required by employer) 460 Fee paid to have tax return prepared 400 Walter donated 20 hours of services to the church FMV of services 1,000 Walter’s subscription to Office Management Quarterly 230 Laundry for required uniforms 270 Skylar’s subscription to “Journal of Franchise Management” 300 Walter’s W-2 income 107,000 Walter’s state income tax withheld 7,950 Skylar’s W-2 income 63,800 Skylar’s state income tax withheld 4,100 Answer Sheet Number of exemptions allowed for 2013 for Mr. & Mrs. White Total Gross Income for 2013 for Mr. & Mrs. White Allowable miscellaneous itemized deductions for the Whites for 2013 prior to any limitations Allowable medical deduction for the Whites for 2013 prior to any limitations Allowable interest deduction for the Whites for 2013 Allowable taxes deduction for the Whites for 2013 Allowable charitable contribution deduction for 2013 for the Whites Assume the Whites Taxable Income was $255,000. Tax liability for 2013 Assume the Whites Taxable Income was $73,400. Tax liability for 2013 Assume the Whites’ Adjusted Gross Income is $180,000, they are entitled to 8 exemptions, and their itemized deductions after all limitations are $11,500. What is their Taxable Income?

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Accounting Questions
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