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2 December, 09:52

Dana and Larry are married and live in Texas. Dana earns a salary of $45,000 and Larry has $25,000 of rental income from his separate property. If Dana and Larry file separate tax returns, what amount of income must Larry report? a. $22,500 O b. $47,500 c. $0 d. $25,000 e. None of these choices are correct.

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  1. 2 December, 10:55
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    D) $25,000

    Explanation:

    Even though Dana and Larry are married, since they are filing separate tax returns, then all the income that Larry must declare are his $25,000 earned as rental income.

    If they were filing together, then they would declare $70,000 as combined income ( = $25,000 + $45,000).
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