Chapter 3 Review

11. Janelle teaches adult literacy classes at the local community college. Last year, her gross income was $51,080. Adjustments to her income include an IRA contribution of $4,086.40 and moving expenses of $178.93. What was Janelle’s adjusted gross income?

• $45,718.09

• $47,544.87

• $46,814.67

• $43,278.65

11. Louie is single and had a taxable income last year of $36,918. His total withholdings were $6,014. Determine whether Louie owes additional taxes or will receive a tax refund. Calculate the amount that he owes or will be refunded.

• $658

• $636

• $435

• $585

11. Ren and Yolanda are married and filing jointly. Last year, their combined taxable income was $98,738, and they had $7,500 in tax credits. Ren had $13,589 in taxes withheld from his paycheck. Yolanda is not employed outside the home. Determine whether Ren and Yolanda owe additional taxes or will receive a tax refund. Calculate the amount that is owed or will be refunded.

• $1,593

• $1,433

• $1,598

• $2,839

14. Joseph purchased stock in a utility company for $2,390. A year later, he sold the stock for $3,072.54. What is the capital gain on the sale of Joseph’s stock?

• $682.54

• $638.28

• $629.28

• $639.39

14. Ten years ago, Meredith purchased a vacation home for $154,075. She recently sold the vacation home for $200,115. If the capital gains tax rate is 15%, how much will Meredith owe in capital gains taxes from this sale?

• $6,291

• $6,298

• $6,294

• $6,906

14. Cleo invested money in municipal bonds. She purchased $2,175 in San Lorenzo bonds and $3,484 in Mesa Heights bonds. A few years later, she sold the San Lorenzo bonds for $2,418.73 and the Mesa Heights bonds for $3,072.16. What is Cleo’s net capital gain or net capital loss?

17. Elias lives in a state with a flat-rate inheritance tax of 4.65%. He recently inherited furniture from his aunt that is valued at $13,660. Calculate the amount of inheritance tax that Elias will owe.

17. Randall works as an independent contractor providing information technology services. He recently completed a contract for $6,425. Calculate Randall’s self-employment taxes that he will pay on his earnings from this contract. Use the self-employment tax rate of 15.3%.

19. Ariel works as a graphic designer earning an annual salary of $48,140. Calculate her gross pay per paycheck if she is paid weekly.

19. Ariel works as a graphic designer earning an annual salary of $48,140. Calculate her gross pay per paycheck if she is paid biweekly.