this is income tax preparation class:
Case Study
For this assignment, you will create an Excel spreadsheet with two tabs, one for each part. Label your tabs as Part 1 and Part 2. Be sure to answer all parts and include your calculations where indicated.
Part 1: Credits
Carrie and Jeremy Snow are married with 2 children Amy (7 years old) and John (3 years old). Jeremy teaches accounting at the local community college and earns $50,000 per year. Carrie is a full-time student obtaining her master’s degree in accounting. Assume their AGI is $50,000. Answer the following questions based upon the above data:
- Jeremy paid the daycare center $5,000 to watch John during his work hours and when Carrie is at school. Calculate the maximum childcare credit allowed for Mr. and Mrs. Snow.
- Carrie’s tuition for the year totaled $16,000. Her books were $200. This is her first year of graduate school. Which education credit can Carrie take? Explain your answer.
- How much can the Snows deduct for the education credit?
Part 2: AMT and Tax Liability
Dante Santana is an unmarried 29-year-old taxpayer with no dependents. Below is his current year taxable income and deductions, along with the single regular tax rate schedule and the alternative minimum tax (AMT) rate schedule. Dante itemized deductions in previous years. The current year standard deduction for single taxpayers is $12,200. Last year, Dantes itemized deductions totaled $15,000 and the standard deduction last year was $12,000.
Using the taxable income and deductions summary and tax rate schedules provided in the below, calculate the amount of Dante’s current year alternative minimum tax (AMT) liability and the regular income tax liability.
Dante Santanas Current Year Taxable Income and Deductions Summary
| Income | |
| Gross revenuerental property | $ 223,000 |
| Royalty incomeoil wells | $ 55,000 |
| Interest incomecorporate bonds | $ 5,500 |
| Interest incomelocal private activity bonds (issued in 2012) | $ 8,000 |
| State income tax refund from prior year | $ 1,500 |
| Deductions | |
| Rental propertyMACRS depreciation* | $ 47,000 |
| Rental propertymanagement fees | $ 36,000 |
| Property insurancehome | $ 4,200 |
| Property insurancerental property | $ 29,000 |
| Real estate taxeshome | $ 11,000 |
| Real estate taxesrental property | $ 45,000 |
| Mortgage interesthome | $ 20,000 |
| Mortgage interestrental property | $ 23,000 |
| Charitable contributions | $ 16,000 |
| State and local income taxes | $ 19,000 |
| Percentage depletionoil wells (excess over adjusted cost basis) | $ 21,000 |
* Depreciation for alternative minimum tax purposes: $33,000
Individual Tax Rate Schedules
Use the links below to access the rate schedules needed for the assignment. ( i can provide pdf book to see the following schedules since you are not be able to open them )
Single Regular Tax Rate Schedule
Alter. Minimum Tax (AMT) Rate Schedule
AMT Exemption Amount: Single Taxpayers
