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Blake Shulton and Taylor Swiftie are married and they both are musicians. Blake's 2017 income included $1,000,000 from selling music and performing...
$100,000 $500,000
Taylor incurred a 2015 loss on the sale of recording equipment in the amount of $100,000. This loss was the only transaction that Taylor had in 2015.
Taylor wishes to contribute the maximum amount to a defined contribution plan in 2017. She is 26 years old.
The couple has the following deductions in 2017:
-Medical expenses $30,000
-Home mortgage interest expense on $3 million mortgage at 3% interest rate $90,000
-Interest on loan to purchase Rolls Royce $40,000
-Charitable contributions $50,000
-State income taxes withheld on Blake's salary $70,000
-Real estate taxes on mansion $100,000
-State income tax estimated tax payments $100,000
-Federal estimated tax payments $200,000
Blake loaned $10,000 to his drummer on July 1, 2016. On September 1, 2017, Blake's drummer filed for bankruptcy and the loan was deemed to be a bad debt.
Requirements:
1) What are tax consequences of Taylor's sale of recording studio? Show calculations.
2) Calculate self-employment taxes for both Blake and Taylor
3) Calculate the happy couple's 2017 taxable income, reflecting personal and dependency exemptions, and all items of taxable income, loss, and deductions.
