Comprehensive Problem (Tax Return Problem). David and Doris Kelley were divorced on February 3, 2018. They...

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Comprehensive Problem (Tax Return Problem). David and DorisKelley were divorced on February 3, 2018. They lived apart during2018. The divorce decree required David to make the followingpayments:
a. Transfer full title to their jointly owned family home toDoris. Fair market value of the home is $180,000, basis $150,000.
b. $1,000 per month mortgage payments on the house, above. Themortgage has 20 years remaining before being fully paid off, butthe payments would end on her death.
c. $2,000 per month for 10 years’ support payments to Doris, ofwhich $600 per month is child support.
d. Doris insisted that the children attend private schools. In2018, David paid $1,500 in tuition for the children’s private highschool. David paid his lawyer $5,000 to represent him in thedivorce proceedings. David and Doris agreed that Doris wouldmaintain a home for the children. Further, Doris agreed to allowDavid to claim one child as a dependency exemption. This agreementwas put in writing and signed by Doris.
Besides the divorce, David has had a big year financially. Heowns an apartment house and he requires each new tenant to place a$750 security deposit with him before moving into the apartment.When the tenant ultimately vacates the apartment, David will refundthe deposit. In 2018, David collected $3,750 in security depositsand rental income of $15,000.
David entered a local raffle in 2018. David won first prize,which was a new automobile with a window price of $20,000. Hechecked with several local car dealers and was positive that if hehad purchased a similar car on his own, the price would have been$18,200.
David loaned his sister Lois $5,000. Lois was repaying the loanat $100 per month plus interest of $40. Since Lois was about todepart on an extended vacation on December 2, 2018, she gave David$200 plus interest of $80 to cover the months of December andJanuary.
David has a good job that pays an annual salary of $50,000. In2018, business was very good and in December 2018 bonuses wereannounced for the employees. David earned a $4,000 bonus for 2018.Bonuses would be mailed to the employees during the first week ofJanuary 2019. David has itemized deductions of $20,000. DetermineDavid’s 2018 taxable income.

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Taxable Income of Mr David for 2018 will be as follows Particulars Amount in Income from Capital Gain a Transfer of jointly owned home to Ms Dory Fair market value 180000 Base Value 150000 30000 Total Income See Answer

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Comprehensive Problem (Tax Return Problem). David and DorisKelley were divorced on February 3, 2018. They lived apart during2018. The divorce decree required David to make the followingpayments:a. Transfer full title to their jointly owned family home toDoris. Fair market value of the home is $180,000, basis $150,000.b. $1,000 per month mortgage payments on the house, above. Themortgage has 20 years remaining before being fully paid off, butthe payments would end on her death.c. $2,000 per month for 10 years’ support payments to Doris, ofwhich $600 per month is child support.d. Doris insisted that the children attend private schools. In2018, David paid $1,500 in tuition for the children’s private highschool. David paid his lawyer $5,000 to represent him in thedivorce proceedings. David and Doris agreed that Doris wouldmaintain a home for the children. Further, Doris agreed to allowDavid to claim one child as a dependency exemption. This agreementwas put in writing and signed by Doris.Besides the divorce, David has had a big year financially. Heowns an apartment house and he requires each new tenant to place a$750 security deposit with him before moving into the apartment.When the tenant ultimately vacates the apartment, David will refundthe deposit. In 2018, David collected $3,750 in security depositsand rental income of $15,000.David entered a local raffle in 2018. David won first prize,which was a new automobile with a window price of $20,000. Hechecked with several local car dealers and was positive that if hehad purchased a similar car on his own, the price would have been$18,200.David loaned his sister Lois $5,000. Lois was repaying the loanat $100 per month plus interest of $40. Since Lois was about todepart on an extended vacation on December 2, 2018, she gave David$200 plus interest of $80 to cover the months of December andJanuary.David has a good job that pays an annual salary of $50,000. In2018, business was very good and in December 2018 bonuses wereannounced for the employees. David earned a $4,000 bonus for 2018.Bonuses would be mailed to the employees during the first week ofJanuary 2019. David has itemized deductions of $20,000. DetermineDavid’s 2018 taxable income.