Patricia and Cliff Are Married but File Separate Tax Returns

question 90

Essay

Patricia and Cliff are married but file separate tax returns.Patricia received a salary of $42,000 and Cliff received $15,000 of dividends from a stock portfolio that is his own separate property.
a.​If Patricia and Cliff live in a common law state, what income should Patricia show on her separate return?​Salary​​Dividends​​
b.​If they live in California (a community property state), what income should Patricia show on her separate return?​Salary​​Dividends​

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Definitions:

Owner's Equity

The residual interest in the assets of an entity after deducting liabilities; it represents the ownership interest of the shareholders or owner in the company.

Assets

Resources owned by a company from which future economic benefits are expected to flow to the entity.

Owner's Equity

The residual interest in the assets of a company after deducting its liabilities, representing the ownership's claim on assets.

Liabilities

Financial obligations or debts that a company or an individual owes to others.