Question

Ken is 63 years old and unmarried. He retired at age 55 when he sold his business, Understock.com. Though Ken is retired, he is still very active. Ken reported the following financial information this year. Assume Ken files as a single taxpayer. 1. Ken won $1,200 in an illegal game of poker (the game was played in Utah, where gambling is illegal). 2. Ken sold 1,000 shares of stock for $32 a share. He inherited the stock two years ago. His tax basis (or investment) in the stock was $31 per share. 3. Ken received $25,000 from an annuity he purchased eight years ago. He purchased the annuity, to be paid annually for 20 years, for $210,000. 4. Ken received $13,000 in disability benefits for the year. He purchased the disability insurance policy last year. 5. Ken decided to go back to school to learn about European history. He received a $500 cash scholarship to attend. He used $300 to pay for his books and tuition, and he applied the rest toward his new car payment. 6. Ken's son, Mike, instructed his employer to make half of his final paycheck of the year payable to Ken as a gift from Mike to Ken. Ken received the check on December 30 in the amount of $1,100. 7. Ken received a $610 refund of the $3,600 in state income taxes his employer withheld from his pay last year. Ken claimed $12,250 in itemized deductions last year (the standard deduction for a single filer was $12,200). 8. Ken received $30,000 of interest from corporate bonds and money market accounts. Determine Ken's gross income.

Answer 1

The 'gross total income' (GTI) is the total income you earn by adding all heads of income. Income from salary, property, other sources, business or profession, and capital gains earned in a financial year are all added to arrive at the GTI.

Note - (i) Itemized deduction of $610 Over Payment $ 12,050 ($12,000) Standard Deduction $ 50 Tax Benefit from Prior year

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