Fred Stearns Is Single and Earned $48,200 as a Graphic

question 102

Short Answer

Fred Stearns is single and earned $48,200 as a graphic artist last year. He had the following itemized deductions: $964 state and local taxes, $1,540 in mortgage interest and $360 in charitable deductions.
A)What is his taxable income?
B)What is the amount of his tax liability? (Use Exhibit 18-3 from your text)

• A)What is his taxable income?
• B)What is the amount of his tax liability? (Use Exhibit 18-3 from your text)

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Definitions:

Double-Declining-Balance Method

A method of accelerated depreciation which doubles the straight-line depreciation rate and applies it to the asset's remaining book value each year.

Depreciation

The method of distributing the expense of a physical asset over its lifespan to represent its depreciation over time.

Residual Value

The estimated salvage value of an asset at the end of its useful life, representing what it could be sold for or would be worth at that future time.

Accumulated Depletion

The total amount of natural resource extraction charged as an expense over time to depreciate the asset's value.