This year, Fred and Wilma, married filing jointly, sold thei…

This year, Fred and Wilma, married filing jointly, sold their home (sales price $750,000; cost $200,000). All closing costs were paid by the buyer. Fred and Wilma owned and lived in their home for the last 20 years. How much of the gain is included in gross income?

This year, Kelsi received a $1,900 refund of state income ta…

This year, Kelsi received a $1,900 refund of state income taxes that she paid last year. Last year, Kelsi claimed itemized deductions of $14,950, including $2,800 of state income taxes. How much of the refund, if any, must Kelsi include in gross income if the standard deduction last year was $13,850?

For the following tax returns, identify the method the IRS l…

For the following tax returns, identify the method the IRS likely used to select the return for audit from the drop-down box provided.   A. Dan made a mistake in adding his income on his tax return. [AUDIT1] B. Michael and Venita deducted a relatively large amount of travel expenses on their tax return for their business. The travel expense is large relative to other taxpayers in similar businesses with similar levels of income. [AUDIT2] C. Juanita failed to report her salary from her second job on her tax return. [AUDIT3]