90.2K

Verified Solution

Link Copied!

Tony and Jeannie Nelson are married and file a joint return. They have four children whose ages are: $5,17,19$ & $23.$ The two youngest live at home all year with their parents and qualify as their dependents. The oldest Roger got married on $5/52023$ and lives with his wife, Jane. The $19-$year$-$old Tabitha is a full$-$time student working towards her bachelor$$s in fine arts at Savannah College of Art & Design. She lives in Savannah, GA$.$ during the academic year and returns to her parents$$ home during breaks.

Tony and Jeannie provide you with the following information regarding their upcoming $2023$ tax return:

$2)$ Jeannie Nelson is an artist; she works part$-$time teaching art $2$ days a week at a magnet art school in their town. She earned $$12,000$ in salary from Cocoa Beach, School of the Arts, the following items were withheld from her gross wages, $$1,200$ federal income taxes, $$120$ state income tax, $$744$ social security, and $$174$ Medicare. She is not covered under their insurance plan as she only works $15$ hours a week. She also volunteers $5$ hours a week with the Girl Scouts of America as an art instructor.

$3)$ Jeannie is known for beautiful Arabian influenced abstracts$.$ During May and August of this past year she had a virtual exhibition and sold paintings at each event. She estimates that the cost of each painting in canvas and supplies is about $$425.$

a$)$ The sales are as follows:

i$)$ May $-19$ paintings for a total of $ $24,000$

ii$)$ August $12$ paintings for a total of $ $18,000$

b$)$ She paints in a studio located in a separate building on the property of their home. The expenses related to the studio allocated based on square footage are as follows:

i$)$ Depreciation $$3,600$

ii$)$ Taxes $$1,900$

iii$)$ Utilities $$3,400$

Using the above information answer the following questions using the excel spreadsheet attached, be sure to show your work:

A$.(10$ points$)$ Compute the net taxable income from Nelson Engineering.

B$.(10$ points$)$ Compute the net taxable income related to Jeannie$$s Abstracts.

C$.(20$ points$)$ Compute the gains$/($losses$)$ related to the Nelson family$$s sale of assets and the appropriate classifications

D$.(10$ points$)$ Compute the itemized deductions of the Nelson family.

E$.(10$ points$)$ Review and compute the amount deductible as QBI.

F$.(10$ points$)$ Compute the Adjusted Gross Income of the Nelsons.

G$.(10$ points$)$ Compute the taxable income for the Nelsons.

H$.(10$ points$)$ Based on the information provided determine if the Nelsons qualify for any tax credits and if so$,$ compute the credit$($s$).$

I. $(10$ points$)$ Compute the total tax liability for $2023$ considering the character of the taxable income computed in part G above.

Understanding the spreadsheet.

The spreadsheet contains several sheets where information needs to be entered. Many of the items on the first sheet, titled $$Summary$$ are input on other sheets within the spreadsheet and carryover to the summary sheet.

Within the spreadsheet items that require your attention and input are highlighted in a blue background.

Lines where the amount is computed in another area of the spreadsheet are indicated in orange and double underlined. Thus, you should not need to input anything in these cells.

Computed cells are in grey. These cells also do not require input.

Answer & Explanation Solved by verified expert

See Answer