In: Accounting
Compute the taxable income for 2017 for Aiden on the basis of the following information. Aiden is married but has not seen or heard from his wife since 2015.
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The personal exemption amount for 2017 is $4,050. Click here to access the standard deduction table to use, if required.
Computation of taxable income | ||
Wages, salaries, tips etc. | 80000 | |
Taxable interest | 2000 | |
Taxable dividends | 2200 | |
Adjusted Gross Income | 84200 | |
Deductions: | ||
Itemized deductions | 9700 | |
Exemptions | 12150 | |
Total Deductions | 21850 | |
Taxable Income | 62350 | |
Tax | 11333 |
Life insurance proceeds received on the event of demise of the insured person is generally not taxable in the hands of the beneficiary. But if any interest is arising out therefrom this is a taxable income and hence to be reported accordingly.
Inheritance is also not taxable in the hands of the beneficiary and therefore not reported in the taxable income. However foreign inheritance is taxed if it is above the limit of $100000.
Generally loans given free of interest is taxed in certain situations. The rule for imputed interest applies in this case. But due to want of adequate information on these, taxable portion of imputed interest could not be calculated.
Exemptions: $4050 x 3 = $12150