39. David is a college professor who does some consulting work on the side. He uses 25% of his home exclusively for the consulting practice. He is single and 63 years old. His AGI (without consideration of consulting income) is $45,000. Other informationfollows:
|Income from consulting business||$4,000|
|Consulting expenses other than home ofﬁce||1,500|
|Total costs relating to home:|
|Interest and taxes||6,500|
|Maintenance and repairs||450|
|Depreciation (business part only)||1,500|
Calculate David’s AGI:
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51. Jose purchased a vehicle for business and personal use. In 2013 he used the vehicle 18,000 miles (80%) for business and calculated his vehicle expenses using the standard mileage rate (mileage was incurred ratably throughout the year). He paid $1,400 in interest and $150 in property taxes on the car. Calculate the total business deduction related to the car:
53. Derrick owns a farm in eastern North Carolina. A hurricane hit the area and destroyed a farm building and some farm equipment and damaged a barn.
|Item||Adjusted basis||FMV before damage||FMV after damage||Insurance proceeds|
Due to the extensive damage throughout the area, the president of the United States declared all areas affected by the hurricane as a disaster area. Derrick, who ﬁles a joint return withhis wife, had $45,000 of taxable income last year. Their taxable income for thecurrent year is $150,000, excluding the loss from the hurricane. Calculate the amount of the loss deductible by Derrick and his wife and the years in which they should deduct the loss.
(Hint: Chapter 5 providesinformation concerning nationally declared disaster areas.)
55. Eric, who is single, participates in an activity that is appropriately classiﬁed as a hobby. The activity produces the following revenue and expenses:
|Materials and supplies||4,000|
Without regard to thisactivity, Eric’s AGI is $55,000. Determine how much income Eric must report, the amount of the expenses he is permitted to deduct, and his AGI:
56. In 2013 Landon has self-employment earnings of $195,000. Compute Landon’s self-employment tax liability and the allowable income tax deduction of the self-employment tax paid.
SE deduction: __________________________