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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 3 years ago
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