Marguerite Hollingsworth is a single orthopedic surgeon based in Scottsdale, Arizona, who earns a substantial salary from a large regional hospital system while also operating a part-time sports medicine consulting practice that generated $92,700 in net self-employment income. She received ordinary dividends of $5,300 (of which $3,700 are qualified) from a diversified brokerage portfolio, a $650 interest payment from a high-yield savings account, and realized a $5,500 long-term capital gain from selling appreciated shares of a biotechnology ETF. Her above-the-line deductions of $14,400 consist entirely of deductible self-employment tax, and she itemizes deductions totaling $38,750, which include mortgage interest on her Scottsdale condo, state and local taxes capped at $10,000, and charitable contributions to a medical research foundation.
Correct Answers
A G I
$375,250.00
gross Income
$389,650.00
tax Liability
$86,309.75
taxable Income
$336,500.00
refund Or Due Amount
$50,049.75
refund Or Due Direction
Balance Due
Step-by-Step Solution
TAX FORMULA — Marguerite Hollingsworth (SINGLE) GROSS INCOME Wages: $285,500.00 Interest Income: $650.00 Ordinary Dividends: $5,300.00 Business Income: $92,700.00 Capital Gain: $5,500.00 = Gross Income: $389,650.00 − Above-Line Deductions: $14,400.00 = AGI: $375,250.00 DEDUCTIONS Standard Deduction (single): $14,600.00 Itemized Deductions: $38,750.00 Deduction Used: $38,750.00 (itemized) = Taxable Income: $336,500.00 TAX CALCULATION Ordinary Taxable Income: $327,300.00 Ordinary Tax: $84,929.75 LTCG + Qualified Div: $9,200.00 LTCG Tax: $1,380.00 − Credits: $0.00 = Tax Liability: $86,309.75 − Taxes Withheld: $36,260.00 = Tax Due: $50,049.75