Question

Compute Aiden’s 2019 taxable income on the basis of the following information. Aiden is married but has not seen or heard from his wife for over three years.

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 due to the death of Aunt Margie (Aiden was the designated beneficiary of the policy) 200,000 Inheritance received on death of Aunt Margie 100,000 Jackson (a cousin) repaid a loan Aiden made to him in 2013 (no interest was provided for) 5,000 Itemized deductions (state income tax, property taxes on residence, interest on home mortgage, charitable contributions) 9,700 Number of dependents (children, ages 17 and 18; mother-in-law, age 60) 3 Age 43

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d.   Aiden's taxable income in 2019 is $

Answer 1

Computation of taxable income of Aiden:

Income from salary 80000

Interest on bonds issued by City of Boston 3000 Interest on CD issued by Wells Fargo Bank 2000 Cash dividend received on Chevron common stock 2200

Life insurance proceeds paid due to the death of NIL

Aunt Marge

Inheritance received on death of Aunt Margie

Repayment of loan received NIL

Gross Total Income 87200

Less:Deductions 9700

Taxable Income 77500