Question

Cecil C. Seymour is a 64-year-old widower. He had income for 2020 as follows:Pension from former employer$39,850Interest income from Alto National Bank5,500Interest income on City of Alto bonds4,500Dividends received from IBM stock held for over one year2,000Collections on annuity contract he purchased from Great Life Insurance5,400Social Security benefits14,000Rent income on townhouse9,000The cost of the annuity was $46,800, and Cecil was expected to receive a total of 260 monthly payments of $450. Cecil has received 22 payments through 2020.Cecil’s 40-year-old daughter, Sarah C. Seymour, borrowed $60,000 from Cecil on January 2, 2020. She used the money to start a new business. Cecil does not charge her interest because she could not afford to pay it, but he does expect to collect the principal eventually. Sarah is living with Cecil until the business becomes profit-able. Except for housing, Sarah provides her own support from her business and $1,600 in dividends on stocks that she inherited from her mother.Other relevant information is presented below.•             Expenses on rental townhouse:Utilities$2,800Maintenance1,000Depreciation2,000Real estate taxes750Insurance700• State income taxes paid: $3,500•              County personal property taxes paid: $3,100•         Payments on estimated 2020 Federal income tax: $5,900•               Charitable contributions of cash to Alto Baptist Church: $7,400• Federal interest rate: 6%•            Sales taxes paid: $912Compute Cecil’s 2020 Federal income tax payable (or refund due)."

requirement

1) What is the 2020 Adjusted Gross Income for Cecil Seymour?

2) What is the 2020 taxable income for Cecil Seymour?
3) What is the 2020 balance due or (refund) for Cecil Seymour?

Answer 1