Compute the taxable income for 2020 for Aiden on the basis of the following information. Aiden is married but has not seen or heard from his wife since 2018.

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
(Aiden was the designated beneficiary of the policy) 200,000
Inheritance received upon death of aunt 100,000
Jackson (a cousin) repaid a loan Aiden made to
him in 2014 (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, and mother-in-law, age 70) 3
Age 43

Required:
a. Indicate whether the items are taxable or not taxable to Aiden.
b.What is Aiden's filing status?
c. Should Aiden itemize his deductions or take the standard deduction?
d. Aiden's taxable income in 2018 is $________

Question

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Respuesta :

AbsorbingMan AbsorbingMan · Answer 1 · 2021-02-02T06:33:54+01:00

Solution :

a). The following items are :

Salary ---- taxable

Cash dividend that is received on common stock of Chevron -- Taxable

The Interest on the bonds that is issued by Boston City --- Not taxable

The proceeds of Life Insurance --- Not taxable

The interest on the CD that is issued by the Wells Fargo Bank -- Taxable

The Inheritance which is received on the death of Aunt Margie --- Not taxable

The Proceeds from repayment of the loan ---- Not taxable

b). Aiden's filing status is Head of households.

c). Aiden should take the standard deductions.

d). Aiden's taxable income in 2018 :

Cash dividend that is received on the Chevron common stock $ 2,200

Salary $ 80,000

Interest on the CD issued by the Wells Fargo Bank $ 2,000

AGI $ 84,200

Less : standard deduction $ 18,000

Taxable income $ 66,200