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344 Assignment 2 Fall 2011

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									                                    Accounting 344: Howard Bunsis
                                        Assignment 2: Fall 2011

1. Chapter 3 questions:
      a. 46
      b. 51

2. Chapter 4 questions:
      a. 15
      b. 29
      c. 31
      d. 43a
      e. 46
      f. 56a and 56c

3. Chapter 5 questions:
      a. 11
      b. 35

4. Complete a 2010 tax return (form 1040 and Schedule A) for David and Denise Lee, considering
   the following. In addition, compute the average and marginal tax rates:
    Both taxpayers are 42 years old, and have MFJ status. There are no children.
    David was divorced in 2009, and under the divorce agreement, David pays Sarah $1,000
       per month for the next 10 years, or until Sarah’s death, whichever occurs first. David paid
       Sarah $12,000 in 2010. In 2010, David also paid a $64,000 property settlement as part of
       the divorce settlement.
    David’s 2010 salary was $108,000, and his employer withheld $16,000 for federal taxes, and
       $4,000 for state taxes. In addition, the appropriate amount of social security and Medicare
       taxes were withheld (6.2% of 106,800 and 1.45% of 108,000).
    Denise’s 2010 salary was $42,000, and her employer withheld $6,000 of federal and $2,000
       of state taxes. In addition, the appropriate amount of social security and Medicare taxes
       were withheld (6.2% of 42,000 and 1.45% of 42,000).
    Denise received $2,000 in dividends on Blue Corporation stock that she had inherited.
    The couple paid $5,000 in mortgage interest and $2,000 in property taxes on their personal
       residence in 2010. Medical expenses were $7,400
    Charitable contributions were $1,500 during the year.

Hint: In calculating the tax owed, use the tax rate schedule on taxable income that excludes the
dividend. The tax on the dividend will be at the capital gain rate. You can use the worksheet on
page 37 of the instructions, or just apply the different rates to the dividends and the rest of the
income.

Bonus: Several states have sued to stop the implementation of a certain element of the Obama
Health Care bill. This issue is tax related. What is the issue? What arguments are being made by
the States that are suing? What are the arguments that the Obama administration will make to
support their position?

								
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