For the Part III (Week 6) assignment, you are asked to do the following:

• Use the Parts I and II assignments you completed previously.
• Correct your Part II assignment mistakes, if any, based on the solution you were provided by your instructor at the end of Week 5.
• Complete the following additional paragraph items: 11 and 12.

 

Mari’s contribution to her traditional IRA

 

 

 

$5,500

 

Net gambling loss

 

 

 

1,000

 

Life insurance premiums

 

 

 

2,700

 

Medical and dental expenses not covered by insurance

 

 

 

6,200

 

Taxes:

 

 

 

 

 

    Ad valorem taxes on personal residence

 

$4,800

 

 

 

    State and local sales taxes

 

    3,200

 

8,000

 

Interest on home mortgage

 

 

 

4,000

 

Cash Contributions:

 

 

 

 

 

    Goodwill (Sioux Falls branch)

 

1,200

 

 

 

    South Dakota governor’s election campaign fund

 

    300

 

1,500

 

The $1,000 net gambling loss for 2013 is the difference between the Frosts’ gambling winnings of $1,200 and losses of $2,200. The life insurance premiums relate to the universal life insurance policies that Will and Mari own. The first beneficiary on both policies is the other spouse, with the second beneficiaries being the children. Included in the medical expenses are $1,200 incurred in 2012, which was paid in early February 2013. The Frosts can substantiate the $3,200 in sales taxes paid based on their purchase receipts for the year. The local sales tax rate in Sioux Falls is 2%. [HINT: Be sure to check to see if the Optional Sales Tax Tables provide the Frosts with a greater deduction.] Mari contributed to the governor’s campaign fund because she thinks his influence is key in getting the Lincoln County land rezoned for commercial use (see item 6 above).

 

12.

The Frosts maintain a household that includes their two children, Austin (age 16) and Emma (age 19). Austin is a junior in high school and a talented wrestler. In hopes of competing at the state tournament, all of his free time is consumed with weight training and wrestling practices. Emma graduated from high school on June 7, 2013, and is undecided about college. Emma is an accomplished vocalist and during 2013 earned $7,200 performing at various events (e.g., weddings, funerals). She placed most of her earnings in a savings account and kept only a small amount to spend on herself.