Tram Le ACCT 3350-Fall 2013 November 11, 2013 The Bells are qualified for 3 exem !io"s# $%e&!

io" 'xem !io"s, li"e (a, (b, (&, a"d (d) *eff a"d +v, are qualified for !-o exem !io"s. *eff &a" o"l, &laim T,ler as de e"de"! be&ause he ass !he qualif, &hild !es! *eff &a""o! &laim A""a as a de e"de"&, exem !io" for a qualif,i"/ &hild be&ause she does "o! ass !he a/e !es! for qualif,i"/ &hild. To mee! !he a/e !es!, !he i"dividual mus! be ei!her u"der !he a/e of 10 a! !he e"d of !he ,ear, a full !ime s!ude"! u"der !he a/e of 21 a! !he e"d of !he ,ear, or be erma"e"!l, a"d !o!all, disabled. +" !his &ase, A""a is 20 ,ears old, /radua!ed from hi/h s&hool a"d is u"de&ided abou! &olle/e. A""a also &a"2! be &laim for qualif,i"/ rela!ive be&ause she does "o! ass !he /ross i"&ome !es!. The /ross i"&ome !es! s!a!es !ha! !o be a de e"de"!, a" i"dividual mus! have a /ross i"&ome less !ha" !he de e"de"&, exem !io" amou"! $3300 i" 2012). +" !his &ase, A""a -as able !o ear" 14,200 i" 2011 so she is "o! qualified. *eff2s -a/e i"&ludes his ,earl, salar, $545,000) from 676 a"d a bo"us $514,000) be&ause he re&eived 1400 bo"us i" 2011$1010 li"e 4). The i"!eres! i"&ome -ould be !o!al 15000 si"&e !he 3000 from Ci!, of 8allas bo"ds is !ax exem ! i"!eres! $1010 li"e 3a, 3b) +" /e"eral9 i"!eres! i"&ome is full, !axable -he" re&eived b, !ax a,er. :o-ever, !he !ax la- rovides ex&lusio" for i"!eres! ear"ed o" bo"ds issued b, s!a!e a"d lo&al /over"me"!s $e./., &i!ies, &ou"!ries, s!a!e a/e"&ies) of !he ;"i!ed %!a!es as -ell as !hose of ;.%. ossessio"s, &alled mu"i&i al bo"d i"!eres!. The 1200 ear"ed from /ambli"/ is also !axable u"der all-i"&lusive i"&ome &o"&e !s.$ %e&!io" +"&ome, li"e 21) ;"der !his &o"&e !, all i"&ome re&eived is &o"sidered !axable u"less some s e&ifi& rovisio" &a" be fou"d i" !he !ax la- !ha! ex&ludes !he i!em i" ques!io" from !axa!io". 7ambli"/ i"&ome is "o! a" exem !io" so i! should be !axable. +v, busi"ess ex e"ses for 2011 i"&ludes su lies, le/al, C<A li&e"ses fee, subs&ri !io"s !o rofessio"al =our"als a"d due !o rofessio"al ori/i"a!io"s &a" be !ax dedu&!able si"&e !hese ex e"ses rela!ed !o her busi"ess. 6oreover, +v, drove !he famil, A&ura 1010 miles o" her =ob assi/"me"! -hi&h is also dedu&!ible u"der !he s!a"dard milea/e ra!e me!hod. The s!a"dard milea/e ra!e me!hod, -hi&h is based o" admi"is!ra!ive &o"ve"ie"&e, is a" es!ima!ed of !he &os! of o era!i"/ a &ar. +v, drove !he &ar for 11000 miles duri"/ !he ,ear bu! o"l, 1010 miles o" her =ob assi/"me"!s so she &a" o"l, dedu&! 1010 miles or!io" o" busi"ess. The &ash /if!s from +v,2s are"! 510000 is "o! !axable si"&e !he value of ro er!, a&quired b, /if! has bee" ex&luded from i"&ome !axa!io" si"&e 1013. 7if!s re&eived are "o! sub=e&! !o i"&ome !axa!io".