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Accounting Problem Essay

Returns ACA1 Tax Treatments for Individual Returns (Task 302.2.3)

Use the following format for your essay. It is based on the grading rubric structure. Identify the item in the appropriate rubric area and then present your reasoning in a paragraph for each tax decision you have made. Use as much space as necessary in each category. (the task instructions give a suggested total length of 2-5 pages.

Recommended Tax Filing Status

Filing status should be separate as a greater portion of income will be above social security and medicare thresholds, and total income will be subjected to lower levels of income taxation. Expenses can still be split/shared with maximum advantage even with a separate filing status. The couple might lose the most advantageous arrangement of capital gains/losses taxes and reductions from a joint filing status,

A2a. Taxable and Non-Taxable Income

Spouse A could potentially limit his taxable income to the amount of cash withdrawn from his partnership income,...

The social security check does not count as taxable income if it can be demonstrated that the benefits derives from this check outweigh the costs of supporting spouse B's mother, and there are of course many deductions for dependents and other expenses available to reduce taxable income.
A2b. Capital Gains and Losses

The couple will need to pay capital gains taxes only if the combined payments from the bond and dividend payments from Company E. are of an amount higher than the $5,000 loss experienced by Spouse B. These losses and gains should be split between the separate tax returns as mutually held assets or assets held in partnership.

A2c. Profit or Losses from Sale of Property

Significant taxes will need to be paid on the profits from the sale of the couple's home, though tax reductions will also result from the increased interest payments on their new home. The sale of the rental home will also incur…

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