Hope Is a Marketing Manager at a Local Company $$\text { Income received }$$

question 4

Essay

Hope is a marketing manager at a local company. Information about her 2016 income and expenses is as follows:
$$\text { Income received }$$
$\begin{array}{|l|c|}\hline \text { Income received } & \\\hline \text { Salary } & \$ 150,000\\\hline\text { Taxes withheld from salary: } \\\text { Federal income tax }\quad \quad \$ 30,000 \\\text { State income tax } \quad \quad \quad 8,000 \\\text { Social Security tax } \quad \quad 7,347 \\\text { Medicare tax } \quad\quad \quad \quad 2,175\\\hline \text { Interest income from bank } & 6,000 \\\hline \text { Dividend income from U.S.stocks } & 4,000 \\\hline \text { Short-term capital gain } & 2,000 \\\hline \text { Long-term capital gain } & 3,000 \\\hline \text { te income taxrefund from last year } & 500\\\hline \text { penses paid: } & \\\hline \text { Unreimbursed dental and eyecar } & \$ 1,800 \\\hline \text { Property taxes on her home } & 3,900 \\\hline \text { Fees paid to town for garbage pick-up } & 400 \\\hline \text { Stock donated to American Red Cross; FMV } \$ 5,000 \text {; purchased } \\\text { three years ago for } \$ 3,100 &\\\hline \text { Dues paid to American Marketing Association } & 600 \\\hline \text { Subscription to professional marketing journals } & 300 \\\hline \text { Fee for preparation of } 2015 \text { tax return and IRS audit assistance } & 2,000 \\\hline \text { Investment advisor fee } & 1,000 \\\hline \text { Home mortgage interest } & 10,000 \\\hline \text { Interest on borrowing to purchase investment assets } & 11,000 \\\hline \text { Interest on car loan } & 1,100\\\hline\end{array}$ Compute Hope's taxable income for the year in good form. Show all supporting computations. Hope is single, and she elects to itemize her deductions each year. Assume she does not make any elections regarding the investment interest expense. Also assume that her tax profile was similar in the preceding year.

Grasp the distinction between the statutory and actual incidence (burden) of a tax.

Identify the conditions under which tax burdens majorly fall on either consumers or producers.

Recognize the impact of government interventions like price controls and taxations on market outcomes.

Realize the implications of legalizing or banning products on market prices, quality, and associated violence.

---

Definitions:

Détente

A period of improved relations between the United States and the Soviet Union in the 1970s, marked by the signing of treaties and efforts to reduce tension during the Cold War.

Korean War

The Korean War was a conflict between North Korea, aided by China and the Soviet Union, and South Korea, supported by United Nations forces primarily from the United States, lasting from 1950 to 1953.

Communist Forces

Political groups or military units that adhere to communist ideologies, often involved in revolutionary activities or governance in various countries.

Greek Civil War

A conflict from 1946 to 1949 in Greece, fought between the Communist-led Democratic Army of Greece and the Greek government army, backed by the UK and USA.