Comprehensive Problem (Tax Return Problem). Harvey and Betty Duran, both age 37, are married with one dependent child. Determine their taxable income from the following information for 2013, and their tax liability. Both the ABC and XYZ partnerships are passive activities. Assume dividends are taxed as ordinary income.
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Harvey's salary
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$45,000
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Betty's salary
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62,000
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Dividends received from domestic corporations (nonqualified)
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11,000
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Interest
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7,000
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Itemized deductions
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6,920
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Net loss from ABC Partnership (acq. 1983)
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(14,200)
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Net loss from XYZ Partnership (acq. 1988)
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(6,000)
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Harvey's business income (moonlighting)
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7,700
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Harvey's business deductions
(before home office expenses)
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22,000
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Harvey's home office expenses
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10,500
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Net loss on rental property
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(31,000)
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Federal Income tax withheld
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9,600
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