Please correct answer and don't use hand raiting Joetta Hernandez is a single parent with two children and earns $53,700 a year.Heremployer's group life insurance policy will pay 2.5 times her salary. She also has $71,600 savedin a 401(k) plan, $5,967 in mutual funds, and a $3,580 certificate of deposit. She wants topurchase term life insurance for 15 years, until her youngest child is self-supporting. She is notconcerned about her outstanding mortgage, as the children would live with her sister in theevent of Joetta's death. Assuming she can receive a 3 percent after-tax, after-inflation returnon insurance proceeds, use the earnings multiple method to calculate her insurance need.How much more insurance does Joetta need to buy? What other information would you needto know to use the needs approach to calculate Joetta's insurance coverage?

To calculate Joetta's additional insurance need using the earnings multiple method, let's break down…

Answered: Joetta Hernandez is a single parent…

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter8: Taxation Of Individuals

Section: Chapter Questions

Problem 70TA

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John Benson, age 40, is single. His Social Security number is 111-11-1111, and he resides at 150 Highway 51, Tangipahoa, LA 70465. John has a 5-year-old child, Kendra, who lives with her mother, Katy. As a result of his divorce in 2016, John pays alimony of 6,000 per year to Katy and child support of 12,000. The 12,000 of child support covers 65% of Katys costs of rearing Kendra. Kendras Social Security number is 123-45-6789, and Katys is 123-45-6788. Johns mother, Sally, lived with him until her death in early September 2019. He incurred and paid medical expenses for her of 15,588 and other support payments of 11,000. Sallys only sources of income were 5,500 of interest income on certificates of deposit and 5,600 of Social Security benefits, which she spent on her medical expenses and on maintenance of Johns household. Sallys Social Security number was 123-45-6787. John is employed by the Highway Department of the State of Louisiana in an executive position. His salary is 95,000. The appropriate amounts of Social Security tax and Medicare tax were withheld. In addition, 9,500 was withheld for Federal income taxes and 4,000 was withheld for state income taxes. In addition to his salary, Johns employer provides him with the following fringe benefits. Group term life insurance with a maturity value of 95,000; the cost of the premiums for the employer was 295. Group health insurance plan; Johns employer paid premiums of 5,800 for his coverage. The plan paid 2,600 for Johns medical expenses during the year. Upon the death of his aunt Josie in December 2018, John, her only recognized heir, inherited the following assets. Three months prior to her death, Josie gave John a mountain cabin. Her adjusted basis for the mountain cabin was 120,000, and the fair market value was 195,000. No gift taxes were paid. During the year, John reported the following transactions. On February 1, 2019, he sold for 45,000 Microsoft stock that he inherited from his father four years ago. His fathers adjusted basis was 49,000, and the fair market value at the date of the fathers death was 41,000. The car John inherited from Josie was destroyed in a wreck on October 1, 2019. He had loaned the car to Katy to use for a two-week period while the engine in her car was being replaced. Fortunately, neither Katy nor Kendra was injured. John received insurance proceeds of 16,000, the fair market value of the car on October 1, 2019. On December 28, 2019, John sold the 300 acres of land to his brother, James, for its fair market value of 160,000. James planned on using the land for his dairy farm. Other sources of income for John are: Potential itemized deductions for John, in addition to items already mentioned, are: Part 1Tax Computation Compute Johns net tax payable or refund due for 2019. Part 2Tax Planning Assume that rather than selling the land to James, John is considering leasing it to him for 12,000 annually with the lease beginning on October 1, 2019. James would prepay the lease payments through December 31, 2019. Thereafter, he would make monthly lease payments at the beginning of each month. What effect would this have on Johns 2019 tax liability? What potential problem might John encounter? Write a letter to John in which you advise him of the tax consequences of leasing versus selling. Also prepare a memo addressing these issues for the tax files.
Michiko and Saul are planning to attend the same university next year. The university estimates tuition, books, fees, and living costs to be 12,000 per year. Michikos father has agreed to give her the 12,000 she needs to attend the university. Saul has obtained a job at the university that will pay him 14,000 per year. After discussing their respective arrangements, Michiko figures that Saul will be better off than she will. What, if anything, is wrong with Michikos thinking?
Joetta Hernandez is a single parent with two children and earns $67,500 a year. Her employer's group life insurance policy would pay 2.5 times her salary. She also has $90,000 saved in a 401(k) plan, $7,500 in mutualfunds, and a $4,500 certificate of deposit. She wants to purchase term life insurance for 15 years until her youngest child is self-supporting. She is not concerned about her outstanding mortgage, as the children would live with her sister in the event of Joetta's death. Assuming she can receive a 6 percent after-tax, after-inflation return on insurance proceeds, use the earnings multiple method to calculate her insurance need. How much more insurance does Joetta need to buy? What other information would you need to know to use the needs approach to calculate Joetta's insurance coverage? Assuming she can receive a 6% after-tax, after-inflation return on insurance proceeds and using the earnings multiple method, Joetta's insurance need is $_____
Marthda and Louis Mitchell are a dual-career couple who just had their first child. Louis, age 30, already has a group life insurance policy, but Martha's employer does not offer a life insurance benefit. A finanical planner is recommending that the 27-year-old Martha buy a $250,000 whole life policy with an annual preminum of $1,670 (the policy has an assumed rate of earnings of 5 percent a year). Help Martha evaluate this advice and decide on an appropriate course of action
Martha and Louis Mitchell are a dual-career couple who just had their first child. Louis, age 30, already has a group life insurance policy, but Martha's employer does not offer a life insurance benefit. A financial planner is recommending that the 27- year-old Martha buy a $250,000 whole life policy with an annual premium of $1,670 (the policy has an assumed rate of earnings of 5 percent a year). Help Martha evaluate this advice and decide on an appropriate course of action .
Sue, aged 48 and Paul, aged 49 have two daughters- Leena aged 17 and Reena aged 15. Sue works as a part-time teacher in a secondary school and earns a $26,000 p.a. salary (plus minimum superannuation guarantee contribution).Paul works as a dentist and earns $145,000 (plus minimum superannuation guarantee contribution). Paul is anxious about their post-retirement financial situation. The couple has approached you for financial advice in respect of reducing the tax payable and their retirement planning. Superannuation Sue (20% Tax Free) 270,000 Sue’s Superannuation asset allocation Investment Asset Allocation Performance p.a. after tax Australian Share 50% 4% Cash & Fixed Interest 15% 1.4% International Shares 30% 10.80% Property 5% 3.10% Calculate the expected return for Sue’s superannuation portfolio using the return for the year ended 2022. Explain to Sue why her superannuation…
Adriana is financially responsible for her aged parents. She has a 5 year old son and wants to provide income for her parents and the son for 15 years should she die. Adriana earns $48,000 after taxes and believes that her parents and son could live on 60 percent of her current income. She anticipates college expenses for her son to be $55,000 and funeral expenses to be $18,000. If government Social security benefits is calculated to be $18,200 per year to be paid for 15 years. She has no existing life insurance but has an investment worth $32,000. If the insurance funds could be invested at 4 percent after taxes and inflation, how much life insurance does Adriana need
Jenny, who is married and the mother of three, is 25 years old and expects to work until 70. She earns $45,000 per year. Jenny expects inflation to be 3% over her working life, and the appropriate risk-free discount rate is 5%. Her personal consumption is equal to 25% of her after-tax earnings, and her combined federal and state marginal tax bracket is 15%. What is the amount of life insurance necessary for Jenny using the Human Life Value method? $509,893.63. $743,672.85. $855,597.84. $900,000.00.
Mary, who is married and the mother of three, is 35 years and expects to work until 75. She earns $55,000 per year. Mary expects inflation to be 3% over her working life, and the appropriate risk-free discount rate is 5%. Her personal consumption is equal to 27% of her after-tax earnings, and her combined federal and state marginal tax bracket is 15%. 1) What is the amount of life insurance necessary for Mary using the Human Life Value method? Solve it correctly. I'll rate
Shen and Sondra Xiang are 37 years old and have one daughter, age 5. Shen is the primary earner, making $87,000 per year. Sondra does not currently work. The Xiangs have decided to use the needs analysis method to calculate the value of a life insurance policy that would provide for Sondra and their daughter in the event of Shen’s death. Shen and Sondra estimate that while their daughter is still living at home, monthly living expenses for Sondra and their child will be about $3,700 (in current dollars). After their daughter leaves for college in 13 years, Sondra will need a monthly income of $3,100 until she retires at age 65. The Xiangs estimate Sondra’s living expenses after 65 will only be $2,700 a month. The life expectancy of a woman Sondra’s age is 87 years, so the Xiang family calculates that Sondra will spend about 22 years in retirement. Using this information, complete the first portion of the needs analysis worksheet to estimate their total living expenses. Life Insurance…
Juan and Maria, who have two young children, are in the process of obtaining a divorce. Juan expects to have $250,000 of income each year while Maria expects to have $180,000 of income each year. Assume the children will live with Maria after the divorce and that Juan will pay child support. What advice can you provide them regarding the child credit? A. The child credit is phased out for single taxpayers with AGI above $400,000. Juan will be entitled to the child credit because his income is below the threshold. The credit is only available to taxpayers who claim the children as dependents, so it would be beneficial to allow Juan to claim the children. The tax savings received by Juan should be considered when the amount of child support that Juan must pay is being determined. B. Juan's AGI exceeds $200,000, but Maria's AGI does not. The child credit thus would be reduced if Juan claims it, but there would be no reduction if Maria claims it. Overall,…
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