Question

Jesse Brimhall is single. In 2019, his itemized deductions were $9,000 before considering any real property taxes he paid during the year. Jesse’s adjusted gross income was $70,000 (also before considering any property tax deductions). In 2019, he paid real property taxes of $3,000 on property 1 and $1,200 of real property taxes on property 2. He did not pay any other deductible taxes during the year.

b.If property 1 is Jesse’s business building (he owns the property) and property 2 is his primary residence, what is his taxable income after taking property taxes into account (ignore the deduction for qualified business income)?

If property 1 is Jesse’s primary residence and property 2 is a parcel of land he holds for investment, what is his taxable income after taking property taxes into account?

Answer 1

Computation of taxable income for 2019(neither property used for business)

	Description	Amount	Working
1	AGI	70,000
2	Standard deduction	(12,000)	(Standard + personalized)
3	Itemized deduction	(13,200)	(9,000+3,000+1,200)
	Taxable income after property taxes	56,800	(1+3) Which is higher

Computation of taxable income for 2019(if property 1 is used for business)

	Description	Amount	Working
1	AGI before property tax	70,000
2	Business property tax	(3,000)
3	AGI	67,000
4	Standard deduction	(12,000)	Standard + personalized deductions
5	Itemized deductions	(10,200)	(9,000+1,200)
	Taxable income after property taxes	55,000	(3+4) Which is higher

Answer 2

Let me help out. For this problem the answers are: a. $56,800 b. $54,600 c. $ 56, 800 (same as a)

Answer 3

Thanks Shelly. Her answers were right for all three!