Question

Please help with both questions . Thank you

of $80,000 and itemized deductions 81 3,00u Scott, age 49, is a surviving spouse. His household includes two unmaii stepsons who qualify as his dependents. He has AGI of $75,000 and itemized deductions of $10,100. d. Amelia, age 33, is an abandoned spouse and maintains a household for her three dependent children. She has AGI of $58,000 and itemized deductions of $10,650 e. Dale, age 42, is divorced but maintains the home in which he and his daughter Jill, live. Jill is single and qualifies as Dale's dependent. Dale has AGI of $64,000 and itemized deductions of $9,900. Note: Problems 25 and 26 can be solverd by referrine to Concept Summary 3.I Exbibits 3.1 through 3.5, and the discussion under Deductions for Adjusted Gross -Income in bis chapter. 1,a Compute Emily's 2018 taxable income on the basis of the following infor mation. Her filing status is single. $85,000 1,100 6,000 5,500 25,000 Salory Intarest incorne fom bonds issued by Xerox Alimony paymens recelived (divorce finalized in 2014) Contribution to traditional IRA Gift from parerts Capital gain from stock investment, held for 7 months Amount lost in football office betting pool 500 40 26. Compute Aiden's 2018 taxable income on the basis of the following information. Aiden is married but has not seen or heard from his wife for er three years $ 80,000 3,000 Interest on bonds issued by City of Boston Interest on CD issued by Wells Fargo Bank Cash dividend received on Chevron common stock Life insurance proceeds paid due to the death of Aunt Margie 2,000 2,200 (Aiden was the designated beneficiary of the policy) Inheritance received on death of Aunt Margie Jackson (a cousin) repaid a loan Aiden made to him in 2010 200,000 100,000 5,000 9,700 (no interest was provided for) Itemized deductions (state income tax, pr operty taxes on residence, interest on home mortgage, charitable contributions) Number of dependents (children, ages 17 and 18; mother-in-law, age 60) Age 43

Answer 1

1). Emily Taxable income is $ 72,550

Calculation of Taxable Income for 2016
Salary	$85,000
Add :Interest Income	$1,100
Add: Alimony received	$6,000
Add: capital Gain	$2,000
Less: Contribution to traditional IRA	($5,500)
Adjusted Gross Income	$88,600
Less:
Standard deduction	$12,000
Personal and dependency exemption	$4,050
Taxable Income	$72,550
Note: Gift for parents is non taxable , gambling losses are not deductible

2).

Computation of taxable income
Wages, salaries, tips etc.	80000
Taxable interest	2000
Taxable dividends	2200
Adjusted Gross Income		84200
Deductions:
Itemized deductions	9700
Exemptions	12150
Total Deductions		21850
Taxable Income		62350
Tax		11333

Life insurance proceeds received on the event of demise of the insured person is generally not taxable in the hands of the beneficiary. But if any interest is arising out therefrom this is a taxable income and hence to be reported accordingly.

Inheritance is also not taxable in the hands of the beneficiary and therefore not reported in the taxable income. However foreign inheritance is taxed if it is above the limit of $100000.

Generally loans given free of interest is taxed in certain situations. The rule for imputed interest applies in this case. But due to want of adequate information on these, taxable portion of imputed interest could not be calculated.     

Exemptions: $4050 x 3 = $12150