Accounting Question -
H, age 45, and W, age 43, are married with two dependent children: M, age 18, and N, age 19. Both are full-time students at a local university. H, who is president of a local bank, is paid a salary of $125,000. He also is the sole proprietor of a jewelry store that had a net profit for 2015 of $75,000. W, a registered nurse at a large hospital, is paid a salary of $50,000. In addition to the above income, H and W received the following during 2015:
a. $3,000 cash dividend on ABC, Inc. stock, which they own jointly. They paid$25,000 for the stock three years ago and it has a current market value of $40,000.ABC, Inc. has $300,000 of current and accumulated E&P.
b. $750 in interest on State of Michigan bonds that H owns.
c. $7,000 in interest on corporate bonds that H and W purchased two years ago at face value for $100,000.
d. W received a check for $400 from her employer in recognition of her outstanding service to the hospital during the past 10 years.
e. The bank provides H with $90,000 of group term life insurance protection. The bank provides all full time employees with group term insurance.
f. 1,000 shares of XYZ common as a stock dividend. Prior to the distribution, H and W owned 9,000 shares of common with a basis of $15,000. H and W did not have the right to receive cash or other assets in lieu of the stock.
g. Because W must be available should an emergency arise, she is required to eather lunches in the hospital cafeteria. The value of the free meals provided by her employer during 2015 was $1,100.
h. H's grandfather passed away in February 2015, leaving H a 400-acre farm in southern Illinois valued at $500,000. H rented the land to F, a neighboring farmer, for $13,000.
i. In order to drain off the excess surface water from 10 acres, F (see (h) above) installed drainage pipe at a cost of $1,500.
j. W sold 50 shares of DEF stock for $100 per share. She bought the stock four years ago for $1,800.
k. H received a dividend check for $280 from the MNO Mutual Life Insurance Company. H purchased the policy in 2002, and W is the primary beneficiary.
l. H and W's only itemized deductions were interest on their home mortgage, $18,000; property taxes on their home, $4,000; and charitable contributions, $6,000.
m. The hospital withheld $11,000 of Federal income taxes on W's salary and the appropriate amount of FICA taxes. The bank withheld $30,000 in Federal income taxes from H's salary and the appropriate amount of FICA taxes. Furthermore, H's quarterly estimated tax payments for 2015 total $35,000.
Calculate H and W's 2015 Federal income tax assuming they file a joint return.