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In June of 2018, Kevin inherits stock worth $125,000. During the year, he collects $5,600 in dividends from the stock. How much of these amounts, if any, should Kevin include in his gross income for 2018? Why? Inheritances are subsequent earnings on inherited property are taxable income and income.
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Answer #1

As per Federal tax rules, Kelvin needs to include only dividend of $5,600 in this case and inherited stock of $125,000 is the fair market value so it should not be included in the gross income.

Hence, the answer is $5,600.

Inheritances are not taxable as per Federal Tax rules and subsequent earnings on the inherited property are taxable.

Hence, Inheritances are not taxable income and subsequent earnings on the inherited property are taxable income.

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