Following is a list information of Peter and Amy Jones for the current tax year


Following is a list information of Peter and Amy Jones for the current tax year. Peter  and Amy are married and have three children, Aubrynne, Bryson, and Caden. They live at 100 Main street, anytown, USA 00000. Peter is a lawyer working for a Native American law firm. Amy works part-time in a genetic research lab. The Jones’ Social Security numbers and ages are as follows:


Name                    S.S. No.                         Age

Peter                  111-11-1111                       32

Amy                   222-22-2222                      28

Aubrynne           333-33-3333                        5

Bryson               444-44-4444                        3

Caden               555-55-5555                         1



Peter’s salary                                                                                  $70,000

Amy’s salary                                                                                     32,000

Interes income on municipal bonds                                                    2,400

Interest income on certificate of deposit (Universal Savings)             3,100

Dividends on GM stock                                                                       1,600



Eyeglasses and exam for Aubrynne                                                  $  600

Orthodontic work for Bryson to correct a congenital defect                2,500

Medical insurance premiums, after-tax basis                                     1,800

Withholding for state income taxes                                                     7,200

Withholding for federal income taxes                                                16,000

State income taxes paid with last year’s tax return

(paid when the return was filed in the current year)                               500

Property taxes on home                                                                       1,100

Property taxes on automobile                                                                 300

Interest on home                                                                                   9,700

Interest on credit cards                                                                            200

Cash contribution to church                                                                  3,900


In addition to the above, on September 17, Peter and Amy donate some Beta Trader, Inc. stock to Lakeville Community College. Beta Trader Inc. is publicly traded. The FMV of the stock on the date of the contribution is $700. Peter and amy had purchased the stock on November 7, 2003 for $300.

Compute Peter and Amy’s income tax liability for the current year using form 1040, Schedules A and B, and Form 8283, if necessary.

Here’s the SOLUTION

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