McGraw-Hill's Taxation of Individuals and Business Entities 3rd Edition by Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver

Exercise 34

Demarco and Janine Jackson have been married for 20 years and have four children who qualify as their dependents.Their income from all sources this year (2011) totaled $200,000 and included a gain from the sale of their home, which they purchased a few years ago for $200,000 and sold this year for $250,000.The gain on the sale qualified for the exclusion from the sale of a principal residence.The Jacksons incurred $16,500 of itemized deductions.a.What is the Jacksons' taxable income?
b.What would their taxable income be if their itemized deductions totaled $6,000 instead of $16,500?
c.What would their taxable income be if they had $0 itemized deductions and $6,000 of for AGI deductions?
d.Assume the original facts except that they also incurred a loss of $5,000 on the sale of some of their investment assets.What effect does the $5,000 loss have on their taxable income ?
e.Assume the original facts except that the Jacksons owned investments that appreciated by $10,000 during the year? The Jacksons believe the investments will continue to appreciate, so they did not sell the investments during this year.What is the Jackson's taxable income?