Charlie was hired by Ajax this year as a corporate executive and a member of the...

Charlie was hired by Ajax this year as a corporate executive and a member of the board of directors. During the current year, Charlie received the following payments or benefits paid on his behalf.


Salary payments	$	118,000
Contributions to qualified pension plan		11,600
Qualified health insurance premiums		11,950
Year-end bonus		21,000
Annual director’s fee		19,900
Group-term life insurance premiums (face = $40,000)		880
Whole life insurance premiums (face = $100,000)		1,970
Disability insurance premiums (no special elections)		4,090

a. Charlie uses the cash method and calendar year for tax purposes. Calculate Charlie’s gross income for the current year.

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Solution:-

a. Charlie uses the cash method and calendar year for tax purposes. Calculate Charlie’s gross income for the current year:-

Account details	Amount
Salary payments	$118,000
Contributions to qualified pension plan	$11,600
Qualified health insurance premiums	$11,950
Year-end bonus	$21,000
Annual director’s fee	$19,900
Group-term life insurance premiums (face = $40,000)	$880
Whole life insurance premiums (face = $100,000)	$1,970
Disability insurance premiums (no special elections)	$4,090
Gross income	= $118,000 + $11,600 + $21,000 + $19,900 + $880 + $1,970 + $4,090 = $177,440

ekkarill92 answered 1 year ago

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