Question

• 51. Comprehensive Problem (Tax Return Problem). Rodney and Alice Jones have three small children, ranging in age from 5 to 10. One child is blind and needs special care. Rodney works as an accountant for a large CPA firm and has gross income of $45,000. Alice is a lawyer with a national law firm and earns $48,000. Rodney's parents are quite old, and he and his wife fully support them. Rodney's employer provides group-term life insurance at twice the employee's annual salary. Rodney is 40 years of age. During 2019, Rodney and Alice receive the following dividends on their jointly held investments: $700 Dividends from Mexico Inc. (Mexican Corp.) Dividends from Widget Steel Corp. 150 They received interest income from the following investments: Interest on State of Ohio highway bonds Interest on deposits in savings and loans $800 400 The Joneses have itemized deductions of $25,000. Compute their taxable income.

Answer 1

Computation of Taxable income ( $)

Particular	Rodney	Alice Jones	Total
1.Gross Income	45000	48000	93000
2.Dividends from Mexico Inc			700
3.Dividends from Widget steel corporation			150
4.Interest on deposit in saving and loans			400
5.Interest on the state of Ohio highway bonds			800
6.total gross income			95050
less: Itemized deduction	15000		15000
Taxable Income			$ 80050