Accounting 208 tax: alimony calculation

Feb 9th, 2015
Price: $5 USD

Question description

Under the terms of a divorce decree executed May 1, 2014, Ahmed transferred a house worth $650,000 to his ex-wife, Farah, and was to make alimony payments of $3,000 per month.  The property has a tax basis to Ahmed of $300,000.

a. How much of this must be reported on Farah’s tax return?

Answer:  $

b. Of that amount, how much is taxable gain or loss that Farah must recognize related to the transfer of the house?

Answer:  $

Juan, who is single, is a self-employed carpenter and is also an employee of Frame It, Inc.  His self-employment net income is $35,000, and he received a W-2 from Frame It for wages of $25,000.  He is covered by his employer’s pension plan, but his employer does not offer a health plan in which he could participate.

a. Up to how much, as a percentage of his self-employed health insurance premiums, could Juan deduct for this year, if any?  Why?

Answer as a Percentage:

Reason WHY?:

b. How much of Juan’s self-employment taxes would be deductible?

Answer as a Percentage:

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