Larry is single and records the following items for 2012. Compute Larry’s tax liability before credits or prepayments.
|
Income— |
|
|
Salary |
$145,000 |
|
Interest from bank savings account |
12,000 |
|
Interest on corporate bonds |
7,000 |
|
Short term capital gain |
8,000 |
|
Expenses— |
|
|
Unreimbursed employee business expenses |
|
|
(no meals or entertainment) |
4,000 |
|
Total medical expenses |
24,000 |
|
State income taxes |
6,500 |
|
Real property taxes |
6,800 |
|
Home mortgage (qualified housing) interest |
7,200 |
|
Casualty loss on vacation home— |
|
|
Decline in value |
20,000 |
|
Adjusted basis |
70,000 |
|
Insurance proceeds |
12,000 |
|
Tax preferences |
116,000 |