Tax Example Questions look at the attachment TAX EXAMPLE – CASE STUDY • David Mitchell, age 47, is district vice president of a fast-food restaurant and is

Tax Example Questions look at the attachment TAX EXAMPLE – CASE STUDY
• David Mitchell, age 47, is district vice president of a fast-food restaurant and is an active participant in the
company’s pension plan.
• Nancy Mitchell, age 39, is the president and the majority stockholder of a temporary service employment
agency. She is an active participant in the company’s retirement plan
• Children
• David Jr., age 15
• Jessica, age 12
• Mark, age 8
• The Mitchells have assembled the following information for calculation of their tax liability.
TAX EXAMPLE – CASE STUDY
• Income
• David’s salary: $115,000
• Nancy’s salary: $131,100
• interest income from a savings account: $438
• short-term capital gains: $2,100
• qualified dividend income: $1,884
• Expenses
• IRA contributions: $11,000
• political campaign contributions: $750
• state and local income taxes: $9,948
• real estate taxes: $4,337
• general sales tax: $899
• sales tax on motor vehicle purchase: $1,225
• home mortgage interest: $17,600
• consumer interest: $2,374
• charitable contributions: $3,902
• tax return preparation fees: $450
• investment adviser fees: $500
TAX EXAMPLE – CASE STUDY
1. What is the Mitchells’ total (gross) income for tax purposes?
2. Identify the exclusions, deductions, and tax credits available to the
Mitchells.
3. What is the Mitchells’ adjusted gross income?
4. What is the Mitchells’ taxable income?
5. What is the Mitchells’ total tax due?

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