Question

Federal Income Taxation. Please I need to know how to solve this question step-by-step.

Esentials of Federal Income Taxation COMPREHENSIVE PROBLEM liability for an o each item and unmarried taxpayer (age 52 with no depen Use the information below to compute the 2019 taxabi pute the 2019 taxable income and tax liability for a taxpayer (age 52 with no dependents). Prepare an analysis showing each item a unt under the appropriate headings of (1) income, (2) gross income exclusions, (3) gross income, (4) deductions for AGI. (5) AGI, (6) deductions from AGI, and (7) taxabl. income. $ 1,728 1,000 30,000 40,000 1,800 Cash Received Interest on savings account Gift of money from parent Rent from farmland owned Proceeds of life insurance policy received upon parent's death Nondegree candidate fellowship, granted 8/20/18, of $450 per month for four months Net pay received (Gross salary of $33.000 less $7.440 state and federal income taxes, $2,046 social security taxes, and $479 Medicare taxes) Employer's share of health insurance premiums, $4,260 De minimis employee fringe benefits valued at $25 Company provided parking costing employer $300/month for 12 months Total cash received 23,035 $97,563 Cash Payments Expenses of farmland rental (real estate taxes) Personal living expenses Total cash payments $ 1,750 26,600 $28.350

Answer 1

Calculation of TAXABLE INCOME

Particulars	Amount($)
Income :
salary	33000	salary given is net salary we will take gross salary for computation
Add Fringe benefits	25	as per pub 525 of irs all the fringe benefits are taxable
Add Fringe benefits of parking	3600	300*12 (as per pub 525 of irs all the fringe benefits are taxable)
Gross Income	36625	33000+25+3600
Interest on saving account	1728
Total Gross Income	38353	36625+1728
Rent from farmland owned	30000
Non degree candidate fellowship	1800	degree fellowship received is allowed as deduction and exempt income as per pub 970 of irs , but non degree fellowship received is taxable
Adjustable Gross Income	70153	38353+30000+1800
Less standard Deduction	-12200	real estate taxes of $ 1750 are allowed in itemised dedution , but as per tax cuts and job cuts rules we can take either standard deduction or itemized deduction which everver is greater , so we have taken standard deduction
Taxable income	57953	70153-12200
Tax liability on base bracket	4543	10% upto 9700 12% (39475-9700)
Tax liability on excess over base@22%	4065.16	(57953-39475)*22%
Tax laibility	8608.16	4543+4065.16
less federal income taxes	-7440
Net federal tax liability	1168	(8608.16-7440)= 1168.16

2) gross income exclusions table

gift of money from parent	$1000	gift received are tax free
proceeds from life insurance from death of parent	$40000	exempt from taxation as per pub 525 of IRS
employers health insurance premium	$4260	exempt from taxation as per pub 525 of IRS
Total gross income exclusions	$45260

* personal living expenses from 2018 new rules of TCJC are not allowed