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Use the information below to compute the 2017 taxable income and tax liability for an unmarried...

Use the information below to compute the 2017 taxable income and tax liability for an unmarried taxpayer (age 52 with no dependents). Prepare an analysis showing each item and amount under the appropriate headings of (1) income, (2) gross income exclusions, (3) total gross income, (4) deductions for AGI, (5) AGI, and (7) taxable income.

Cash Received

Interest on savings account -- $1,728

Gift of money from parent -- $1,000

Rent from farmland owned -- $30,000

Proceeds of life insurance policy received upon parent's death -- $40,000

Nondegree candidate fellowship, granted 8/20/17, of $450 per month for four months -- $1,800

Net pay received (Gross salary of $33,000 less $7,440 state and federal income taxes, $2046 social security taxes, and $479 Medicare taxes )-- $23,035

Employers share of health insurance premiums, $4,260 -- $0

De minims employee fringe benefits valued at $25 -- $0

Company provided parking costing employer $300/month for 12 months -- $0

Total cash received $97,563

Cash payments

Expenses of farmland rental (real estate taxes) -- $1,750

Personal living expenses -- $26,600

Total cash payments $28,350-

Solutions

Expert Solution

(1)

Interest on savings account                                                                           $1,728

Gift of money from parent                                                                             $1,000

Rent from farmland owed                                                                              $30,000

Proceeds of life insurance policy received upon parent's death $40000

Net pay received (Gross salary of $33,000 less $7,440 state and federal income taxes, $2046 social security taxes, and $479 Medicare taxes ) $23,035

Total cash received                                                                                           $97,563

INCOME $193,326

(2) GROSS INCOME EXCLUSIONS

Nondegree candidate fellowship, granted 8/20/17, of $450 per month for four months $1,800

Employers share of health insurance premiums, $4,260 $0

De minims employee fringe benefits valued at $25 $0

Company provided parking costing employer $300/month for 12 months $0

Total cash payments $28,350

GROSS INCOME EXCLUSIONS $31,900

(3)TOTAL GROSS INCOME

193,326-31900= $161,426

(4)DEDUCTIONS OF AGI

Interest on savings account $1728 (in 80tta we get deduction of $10000)

Gift of money from parent $1,000 (in sec 56viia exempted till 50000)

Rent from farmland owned ($30,000 -30%) $9000

Proceeds of life insurance policy received upon parent's death $25000

$40,000(if senior citizen then deduction of 30000,if not then 25000)   

DEDUCTIONS $36,728

ekkarill92 answered 1 year ago
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