Carl and Carla Are a Very Wealthy Retired Couple in Their

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The Answer is a. Their 2018 regular taxable income is $950,000 [$980,000 - $30,000]; their regular income tax is $290,879 [(950,000 - 600,000) x 37% + $161,379]. They are subject to the Medicare surtax on $730,000 ($980,000 - $250,000) of investment income at 3.8% or an additional $27,740 for a total of $318,619 in income tax. For itemized deductions, the charitable contribution is deductible.
b. If they claim the standard deduction, their 2018 taxable income is $953,400 ($980,000 - $26,600). Standard deduction = $24,000 + $1,300 + 1,300 = $26,600; their income tax would have been increased by $1,258 [($30,000 - $26,600) x 37%)] to $319,877 ($318,619 + $1,258).

Carl and Carla Are a Very Wealthy Retired Couple in Their

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