Question

Harvey and Donna Specter have been married for 20 years and have four children who qualify as their dependents (Mike, 6; Rachel, 9; Louis, 15; and Jessica, 18). The couple received salary income of $270,000 and they sold their home this year. They initially purchased the home 8 years ago for $250,000 and have lived in it ever since. They sold it for $650,000. They sold some stock they had owned for 4 years and had a $8,000 loss on the sale. The Specter’s also cashed in a Certificate of Deposit early during the year and paid a $975 penalty on the early withdrawal. The Specter's accumulated $29,850 of itemized deductions and they had $10,550 withheld from their paychecks for federal taxes.

Gross Income
Deductions FOR AGI
Adjusted Gross Income
Standard Deduction
Itemized Deductions
Taxable Income
Tax Liability
Other Taxes, Prepayments, Credits
Amount Due OR Refund

Use the table below to show what you did and did not include in Gross Income, Deductions and/or other items and your explanation. Feel free to add additional rows as necessary.

Item	Amount	Explanation

Answer 1

For Harvey and Donna Specter:

She has 4 children aged 6,9,15 and 18 respectively.

Their income include income from salary, sale of home, and loss from sale of stock.

The penalty paid on cashing of COD is not included in below answer as it cannot be claimed as a deduction or expense.

Please find the solution given below:

Also find the explanation for the answer given as below: