Your firm has clients named Danny and Mary. They are married and have two dependent children. They...

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Your firm has clients named Danny and Mary. They are married and have two dependent children. They also fully support Mary's mother, who lives with them and has no income. Their 2010 tax and other related information is as follows:

Total salaries - $110,000
Bank account interest income - $3,500
Municipal bond interest income - $1,500
Danny has part-time consultant income of $7200
Rent income - $7,000
Rent expenses - $9,000
Value of employer-provided medical insurance - $5,500
Value of premiums for $50,000 of group term life insurance provided by employer - $500
Share of partnership income - $30,000
Partnership distribution - $10,000
Dividend income from ABC stock - $2,000
Loan from Danny's parents - $5,000
Gift from Danny's parents - $15,000
Total itemized deductions - $16,000

Determine Danny and Mary's taxable income.

Give detailed answers and explanations

David · Accepted Answer

Order id: PPSub270715_310037_1
Statement of Taxable Income for the year 2010 
   Salaries Income 110000 
Bank Interest 3500 
Business Income 37200 
Dividend Income 2000 
AGI 
 
152700 
Less: Self Employment tax 
deduction 509 
Itemized Deduction 16000 
Exemption (3650*5) 18250 
Taxable Income 117941
Notes:

Your firm has clients named Danny and Mary. They are married and have two dependent children. They also fully support Mary's mother, who lives with them and has no income. Their 2010 tax and other...

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