Stephanie and Matt Are Married with 2 Dependent Children

question 134

Essay

Stephanie and Matt are married with 2 dependent children.During 2013,they have total gross income of $140,000.Their allowable deductions for adjusted gross income total $6,000 and they have $6,000 of allowable itemized deductions.Compute Stephanie and Matt's 2013 taxable income and 2013 income tax liability.
a.Assume that in addition to the above information,Stephanie sold some land that she had held as an investment at a gain of $5,000.What is the effect of the gain on their taxable income and income tax liability? You do not need to recalculate,just explain the general effect of the sale of the land.
b.Assume the same facts as in part (a)and that Matt also sold some stock he purchased several years ago at a $12,000 loss.What is the effect of the gain on the land and the loss on the stock on their taxable income? Explain.

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Definitions:

Interpretation

In psychoanalysis, the analyst’s noting supposed dream meanings, resistances, and other significant behaviors and events in order to promote insight.

Psychophysicist

A scientist who studies the relationship between the physical properties of stimuli and the sensations and perceptions they evoke.

Wavelength

The distance from the peak of one light or sound wave to the peak of the next. Electromagnetic wavelengths vary from the short blips of cosmic rays to the long pulses of radio transmission.

Endocrine System

A collection of glands that produce hormones regulating metabolism, growth and development, tissue function, sexual function, reproduction, sleep, and mood, among other things.