Millicent Fairchild is a single orthopedic surgeon based in Scottsdale, Arizona, who earns a substantial hospital salary in addition to income from her private consulting practice organized as a sole proprietorship. During 2024, she also sold appreciated shares of a biotech fund held long-term, generating a capital gain, and received modest interest and dividend income from her brokerage accounts. Her above-the-line deductions reflect self-employed health insurance premiums and one-half of her self-employment tax, while her itemized deductions include significant state and local taxes (capped at $10,000), mortgage interest on her primary residence, and charitable contributions to a local hospital foundation.
Correct Answers
A G I
$496,500.00
gross Income
$501,400.00
tax Liability
$126,189.75
taxable Income
$458,100.00
refund Or Due Amount
$52,359.75
refund Or Due Direction
Balance Due
Step-by-Step Solution
TAX FORMULA — Millicent Fairchild (SINGLE) GROSS INCOME Wages: $417,100.00 Interest Income: $2,150.00 Ordinary Dividends: $3,750.00 Business Income: $55,900.00 Capital Gain: $22,500.00 = Gross Income: $501,400.00 − Above-Line Deductions: $4,900.00 = AGI: $496,500.00 DEDUCTIONS Standard Deduction (single): $14,600.00 Itemized Deductions: $38,400.00 Deduction Used: $38,400.00 (itemized) = Taxable Income: $458,100.00 TAX CALCULATION Ordinary Taxable Income: $435,500.00 Ordinary Tax: $122,799.75 LTCG + Qualified Div: $22,600.00 LTCG Tax: $3,390.00 − Credits: $0.00 = Tax Liability: $126,189.75 − Taxes Withheld: $73,830.00 = Tax Due: $52,359.75