QUESTION 1:_x000D_
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Jack and Jill are married and have two dependent children, and they have the following items in 2015:_x000D_
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Income:_x000D_
Salaries $150,000_x000D_
Bank Interest $25,000_x000D_
STCG $4,000_x000D_
STCL ($1,500)_x000D_
LTCL ($3,500)_x000D_
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Expenses:_x000D_
Qualified medical expenses $8,525_x000D_
State income taxes $11,525_x000D_
Real estate on their primary residence $2,300_x000D_
Qualified residence interest $9,200_x000D_
Investment interest expense $7,500_x000D_
Cash charitable contributions $12,575_x000D_
Tax return preparation fees $2,500_x000D_
Unreimbursed employee business expenses $3,500_x000D_
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This family is asking you to prepare their tax return. What is the taxable income and tax liability? (MUST SHOW ALL COMPUTATIONS AND IN GOOD FORM)_x000D_
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QUESTION 2:_x000D_
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Annie and Joe incurred and paid the following amounts of interest during 2015:_x000D_
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Home acquisition debt interest $15,000_x000D_
Credit card interest $5,000_x000D_
Home equity loan interest $6,500_x000D_
Investment interest expense $10,000_x000D_
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With 2015 net investment interest income of $2,000, calculate the amount of their allowable deduction for investment interest and their total deduction for allowable interest. Home acquisition principle is less than $1,000,000, and the home equity loan principle is less than $100,000._x000D_
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What is the allowable interest deduction before any phase-out limits, if any? (MUST SHOW ALL COMPUTATIONS IN GOOD FORM)_x000D_
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What is the allowable investment interest expense deduction before any phase-out limits? (MUST SHOW ALL COMPUTATIONS IN GOOD FORM)_x000D_
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