Gary Whitaker (age 60 & single) started a high quality antique furniture business on l January 2015
Gary Whitaker (age 60 & single) started a high quality antique furniture business on l January 2015. Gary’s business had the following activity during 2015:Purchased furniture inventory costing a total of—-($1,800,000)Made cash sales of furniture (costing $800,000) totaling—-$3,500,000Sold furniture (costing $150,000) on 12/31/2015, but the buyer didn’t pay Gary until 1/6/2016—-$800,000.Furniture inventory on hand as of 12/31/2015 had a total cost of $750,000, but the inventory only had a net realizable value of $720,000. Gary investigated his inventory situation further and discovered that inventory costing $100,000 had been stolen during the year. Unfortunately, Gary has no insurance coverage for this loss.Gary paid salaries and operating expenses during 2015 of—-($200,000)Gary paid unreimbursed business entertainment expense of—-($12,000)Gary also paid for the annual company picnic which had a cost of—-($10,000)Gary paid medical insurance on the employees of—-($15,000)In addition, the business paid medical insurance for Gary costing—-($8,000)Gary’s personal car was driven 12,000 miles (9,000 miles business at 750 miles per month) and an additional 3,000 miles personally at 250 miles per month. Gary’s total car operating expenses (lease, gas, oil, insurance, etc.) totaled $12,000. In addition, Gary spent $3,000 for parking while on business and an additional $900 for parking tickets received while on business.Please note that Gary desperately wants to use the cash methodfor reporting income from the antique furniture business.In addition, to the income and expenses noted above, Gary had the following other income and expenses during 2014:Received interest income from Bank of America bonds—-$400,000Paid CA income tax of—-($180,000)Paid personal tax preparation $ consulting fees of—-($30,000)Paid uninsured medical costs for Gary’s psychiatrist of—-($250,000)Gary had a second car, which was used only to drive to the psychiatrist. Gary drove 4,800 miles for visits to the psychiatrist (400 miles Per month) and paid parking while at the psychiatrist of—-($4,200)REQUIRED:How much is Gary’s taxable income for 2015? D. IGNORING any “alternative minimum tax”, how much is Gary’s net tax liability for 2015?
