Question

Compute the taxable income for 2020 for Aiden on the basis of the following information. Aiden is married but has not seen or heard from his wife since 2018 Salary $80,000 Interest on bonds issued by City of Boston 3,000 Interest on CD issued by Wells Fargo Bank 2,000 Cash dividend received on Chevron common stock 2,200 Life insurance proceeds paid upon death of aunt (Aiden was the designated beneficiary of the policy) 200,000 Inheritance received upon death of aunt 100,000 Jackson (a cousin) repaid a loan Aiden made to him in 2014 (no interest was provided for) 5,000 Itemized deductions (state income tax, property taxes on residence, interest on home mortgage, and 9,700 charitable contributions) of dependents (children, ages 17 and 18, and mother-in-law, age 70) Age Nun 43 Click here to access the standard deduction table to use, if required. a. Indicate whether the items are taxable or not taxable to Aiden. Cash dividend received on Chevron common stock Salary Interest on bonds issued by City of Boston Life insurance proceeds Interest on a CD issued by Wells Fargo Bank Inheritance received upon the death of his aunt Proceeds from repayment of a loan b. What is Aiden's filing status? c. Should Aiden itemize his deductions or take the standard deduction? d. Aiden's taxable income in 2020 is $

Answer 1

a)	Indicate whether the items are taxable or not
	Cash dividend received on Chevron common Stock	Taxable
	Salary	Taxable
	Interest on bonds issued by City of Boston	Non-taxable
	Life Insurance Proceeds	Non-taxable
	Interest on CD issued by Wells Fargo bank	Taxable
	Inheritance received on death of Aunt Margie	Non-taxable
	Proceed from repayment of a loan	Non-taxable

b)

What is Aiden's filling Status

Head of Household

c)

Should Aiden itemize his deductions or take the standard deduction?

He should take standard deduction as it $18,650 whereas itemized deduction is only $9,700

d	Aiden's Taxable income in 2020
	Cash dividend received on Chevron common Stock	$2,200
	Salary	$80,000
	Interest on CD issued by Wells Fargo bank	$2,000
	AGI	$84,200
	Less: Standard deduction	($18,650)
	Taxable income	$65,550

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