(4 points) Mel and Tara are married and file jointly for 2024. They earned $195,000 in total salaries together for the year working for an architecture and construction firm. They moved across the country when Tara was offered a new job opportunity within the company this year, incurring $7,500 in moving expenses. The moving expenses were not reimbursed by their employer. As part of the move, Mel and Tara had to sell their house this year. They had purchased the home in 2018 and after making some improvements to the home its adjusted tax basis at the time of sale was $310,000. They sold it for $575,000. They also paid $1,500 in interest on loans Mel took out to pay for his tuition and fees as an undergraduate architecture major. After the move, Mel had some health issues which required the couple to pay $15,000 in medical expenses (part for health insurance premiums and part deductibles and other out-of-pocket expenses for hospital care). Mel and Tara’s AGI for 2024 is:

Determining AGI (4 points): In 2024, Carlita moved across the country from the east coast to the west coast. She was moving because the advertising agency she worked for wanted her to relocate to work with a big new client the company had landed on the west coast. Her company reimbursed $9,000 of moving expenses (her total cost for the move), and her total wages for the year were $121,000. While living on the west coast, she began volunteering for a children’s hospital doing public relations for their office. She estimated her time volunteering at the hospital during the year was worth $6,100. She also paid $365 in professional dues to the American Association of Advertising Agencies at the beginning of the year, which was not reimbursed by her employer. Determine Carlita’s AGI for 2024.

Determining filing status for the taxpayer named for YEAR 2: Joann and David were married and filed jointly for 10 years. However, in YEAR 1 (last year), they divorced. In YEAR 2, Joann keeps up the home for herself and their son Miles who is 11, and David no longer lives with them. Joann has not remarried. Taxpayer of interest: Joann. (4 points)

Determining Gross Income (4 points): Patrick and Kelsey are married filing jointly in 2024. Patrick works at a car dealership, and Kelsey is a nurse at a hospital. During the year, they received $175,000 in total (together) for salaries from their employers. In addition, the hospital Kelsey worked for paid $4,750 for the employer’s portion of their medical and dental health insurance premiums. Finally, Kelsey’s grandmother passed away and left her $14,750. Determine the total recognizable gross income for Patrick and Kelsey in 2024.

Identifying qualifying relatives (4 points): The Striker household has 6 people in it. All the individuals are U.S. citizens and, outside of Warren and Janet, none of the other individuals are married. The following activity occurred in 2024. Two parents: Warren and Janet, who are married and file jointly. Three children: Lea (age 16), Rex (age 20), and Tim (age 22) Lea lives with Warren and Janet all year and is entirely supported by them. Rex is an undergraduate college student at George Mason and lives in the dorm while at school but at home during the summer. He is a great student and earned a merit based scholarship to cover his tuition and fees of $10,000 that requires no service on his part. His parents pay $14,000 for his dorm costs, meal plan, and medical/dental care for the year. Rex does not have any additional income of his own. Tim lives at home with his parents all year and is unemployed. He does not attend school. His parents cover all of his housing, food, and insurance costs totaling $20,000 per year. Janet’s mother: Karen (77). She lives with Warren and Janet the entire year and does not work or file a separate tax return. She is entirely supported by Warren and Janet. Determine the number of “qualifying relatives” Warren and Janet have for purposes of filing status.

Use the following tax structure to answer Part 1 and Part 2. Taxpayer Taxable Income Total Tax Chandler $80,000 $25,000 Monica $60,000 $25,000 Phoebe $35,000 $25,000 Joey $35,000 ? Rachel $60,000 $25,000 Ross $80,000 $25,000   Rachel and Monica agree that a tax system should be fair in the sense that it should have vertical equity. However, while Rachel thinks that vertical equity should be assessed in terms of the tax dollars paid by taxpayers, Monica thinks it should be assessed based on the tax rate applied to taxpayers. Ignoring the potential amount of tax Joey pays in the tax structure above, who is likely to think the tax structure above is fair in terms of vertical equity? (4 points)

Determining filing status for the taxpayer named for YEAR 2: Michael’s wife Tammy passed away in YEAR 1 (last year). They did not have any children. Michael has not remarried in YEAR 1. Taxpayer of interest: Michael. (4 points)

There are many reasons why countries may not actually enforce their laws. Which of the following are reasons discussed in class?       1. Weak enforcement can be promised as a “bargaining chip” in international economic negotiations with other countries.      2. High levels of corruption in some countries undermine the rule of law.      3. Some countries don’t have enough investigators or enforcement agencies to support their laws.      4. Many countries are not interested in joining the WTO so they don’t need to enact the types of laws membership requires.      5. In trying to attract foreign investors, countries enact legislation that does not reflect national values.  

A manager at our company got upset when a visitor asked one of her engineers a question during a tour. The manager explained to the visitor that he should have asked her, since she was in charge of the area. The manager’s tendency is:

Which of the following corporate activities would be illegal for a U.S. company under the FCPA?