What will be Ahmed’s medical expense deduction?

 

 

 

Course Name: Tax and Zakat Accounting	Student’s Name:
Course Code: ACCT 422	Student’s ID Number:
Semester: 1st	CRN:
Academic Year: 1443 H

 

For Instructor’s Use only

Instructor’s Name: Dr. Ashfaque Ahmed
Students’ Grade:           /5	Level of Marks: High/Middle/Low

Instructions – PLEASE READ THEM CAREFULLY

• The Assignment must be submitted on Blackboard (WORD format only) via allocated folder.
• Assignments submitted through email will not be accepted.
• Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling your information on the cover page.
• Students must mention question number clearly in their answer.
• Late submission will NOT be accepted.
• Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO No exceptions.
• All answers must be typed using Times New Roman (size 12, double-spaced) No pictures containing text will be accepted and will be considered plagiarism.
• Submissions without this cover page will NOT be accepted.

 

 

Assignment 3

Q-1- To make income taxable, income must be realized and recognized. Explain in your own words the difference between income realization and income recognition, and then provide a short numerical example to indicate the difference (Do not copy the same numerical example from other students). (1.5 mark)

Answer

 

Q.2- Mr. X and Mrs. Y are married and have two dependent children. P & Q They also fully support Mrs. Y’s mother who lives with them and has no income. Their 2014 tax and other related information is as follows:  (2 marks)

 

Particulars	Amount in $
Total salaries	320,000
Bank account interest income	7,000
Municipal bond interest income	3,000
Value of employer provided medical insurance	11,000
Value of premiums for $ 100000 of group term life insurance provided by employer	1,000
Gift from X’S parents	30,000
Gain from the sale of qualified small business stock acquired in 2008	30,000
Total itemized deductions	32,000
Dividend income—from ABC stock,	4,000
Loan from X’S parents	10,000

 

Required: Compute Mr. X and Mrs. Taxable income. (Show all calculations in proper /good form.)

Q.3- Ahmed’s medical expenses include the following: (1.5 mark)

 

Particulars	Amount in $
Food for personal use (expenses)	2,000
Travel allowances	5,000
Visitors fees	1,000
Prescription drugs	1,200
Eyeglasses	700
General purpose vitamins	200
Medical premiums	21,700
Doctors’ fees	4,000
Hospital fees	6,700

 

Ahmed’s AGI for the year is $66,000. He is single and age 59.  Insurance company reimburses none of the medical costs and other related items. After considering the AGI floor,

Required – What will be Ahmed’s medical expense deduction?