Homework SourseProblem 330 LO 1 Compute Aidens 2017 taxable income on the b
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.
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.
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 $
|
Solution
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
| 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 | |
