Problem 3-30 (LO. 1) Compute Aiden's 2017 taxable income on the basis of the following information....

Problem 3-30 (LO. 1)

Compute Aiden's 2017 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 upon 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 2010 (no interest was provided for)	5,000
Itemized deductions (state income tax, property taxes on residence, interest on home mortgage, and charitable contributions)	9,700
Number of dependents (children, ages 17 and 18; mother-in-law, age 60)	3
Age	43

The personal exemption amount for 2017 is $4,050. Click here to access the standard deduction table to use, if required.

a. Indicate whether the items are taxable or not taxable to Aiden.

Cash dividend received on Chevron common stock
Salary
Interest on bonds issued by City of Boston
Life insurance proceeds
Interest on a CD issued by Wells Fargo Bank
Inheritance received upon the death of his aunt
Proceeds from repayment of a loan

b. What is Aiden's filing status?

c. Should Aiden itemize his deductions or take the standard deduction?

d. Aiden's taxable income in 2017 is $

Solutions

Expert Solution

Salary	+8 0000
Interest on bonds issued by city of boston	(3000) excluded
Interest on CD issued by wells Fargo Bank	+ 2000
Cash dividends received on Chevron common stock	+ 2200
Life insurance proceeds paid on death of aunt ( Aiden was the designated beneficiary of the policy)	(200000) excluded
Inheritance received upon death of aunt	(100000) excluded
Jackson (a cousin) repaid a loan Aiden made to him in 2008 ( no interest was provided for)	(5000) excluded
Itemized deductions ( state income tax, property taxes on residence, interest on home mortgage, and charitable contributions)	- 9700
Number of dependents (children, ages 17 and 18 and mother-in-law, age 70) (3 * 4050)	- 12150
AGI ( 80000 + 2000 + 2200 - 9700 - 12150)	$ 62350

AGI	$ 62350
Standard deduction 2017 ( head of household)	9350
Personal exemption ( 1 * 4050)	4050
	$ 48950

Aiden chose to itemize his deduction from AGI ($9700) because it provided a greater deduction than head of house hold ( as an abandoned spouse ) . Aiden's taxable income is $48950. Aiden is single as his spouse is away for 3yrs without being heard

ekkarill92 answered 1 year ago

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