Clifford Bancroft is a single orthopedic surgeon based in Scottsdale, Arizona, who earns a substantial W-2 salary from a regional hospital network while also operating his own independent surgical consulting practice as a sole proprietor. In addition to his earned income, he received modest interest and dividend income from a brokerage account and recognized a $11,000 long-term capital gain from the sale of appreciated stock. His above-the-line deductions consist primarily of self-employment tax and a self-employed health insurance deduction, and he itemizes deductions including mortgage interest on his home, state and local taxes (subject to the SALT cap), and charitable contributions.
Correct Answers
A G I
$354,000.00
gross Income
$365,900.00
tax Liability
$78,359.75
taxable Income
$315,500.00
refund Or Due Amount
$56,039.75
refund Or Due Direction
Balance Due
Step-by-Step Solution
TAX FORMULA — Clifford Bancroft (SINGLE) GROSS INCOME Wages: $242,600.00 Interest Income: $450.00 Ordinary Dividends: $2,450.00 Business Income: $109,400.00 Capital Gain: $11,000.00 = Gross Income: $365,900.00 − Above-Line Deductions: $11,900.00 = AGI: $354,000.00 DEDUCTIONS Standard Deduction (single): $14,600.00 Itemized Deductions: $38,500.00 Deduction Used: $38,500.00 (itemized) = Taxable Income: $315,500.00 TAX CALCULATION Ordinary Taxable Income: $303,300.00 Ordinary Tax: $76,529.75 LTCG + Qualified Div: $12,200.00 LTCG Tax: $1,830.00 − Credits: $0.00 = Tax Liability: $78,359.75 − Taxes Withheld: $22,320.00 = Tax Due: $56,039.75