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ohn received $100,000 cash from his company for his good work performance and he also received...

ohn received $100,000 cash from his company for his good work performance and he also received stock shares worth $200,000 from his father upon his death in 2019. On December 31, 2019, he received cash dividend in the amount of $5,000 from his inherited stock. John came to you to know his INCOME tax consequences from the above events. How would you advise him? (Note: You don’t need to calculate tax liability. Simply itemize gross income and exclusions.)

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Answer #1

Answer -

Step - (1) - Facts of the case given -

Ohn received $100000 cash from his company and he also received stock shares worth $200000 from his father upon his death in 2019. On December 31, 2019, he received cash dividend in the amount of $5000 from his inherited stock.

.

Step - ( 2 ) - Analysis and Conclusion -

Ohn is not liable for taxes on the inherited value of stocks he received from his father upon his death. But now, inherited stocks are Ohn's investments, and he is liable to pay the taxes on cash dividends he received from inherited stocks.

Ohn's gross income

= Cash received from his company + Cash dividend received from inherited stocks

= $100000 + $5000

= $105000

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