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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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