The Smith Family Has the Following Income During the Tax Year They Sold a Vacation Home for }

question 98

Essay

The Smith family has the following income
$\begin{array}{lc}\text { Salaries } & \$ 88,000 \\\text { Dividends } & 4,000 \\\text { Interest on General Motors Bonds } & 9,000 \\\text { Interest on Boston Bonds } & 8,000 \\\text { Interest on savings accounts } & 2,000\end{array}$ During the tax year they sold a vacation home for $65,000 that they had acquired several years ago for $58,000. They also sold some of their GM stock, receiving $22,000 after brokerage commissions. The shares had originally been purchased for $30,000. They paid $19,000 interest on their home mortgage and $3,000 interest on credit card debt. They paid state income tax of $7,000 and real estate tax of $3,000. They donated $2,000 to their church. They also paid $1,400 toward the support of an elderly parent. The Smith's have two small children. The personal exemption rate is $3,050. What is the Smith's taxable income? Show all calculations clearly.

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Definitions:

Coenzyme Q

A fat-soluble substance found in the mitochondria, essential for the production of energy in cells, and functions as an antioxidant.

Transfer Electrons

The movement of electrons from one atom or molecule to another, a fundamental process in chemical reactions and electricity conductance.

Dehydrogenation

A form of oxidation in which hydrogen atoms are removed from a molecule.

Hydrogen Atoms

The simplest atoms consisting of only one proton and one electron.