Individual Income Taxes
43rd Edition
ISBN: 9780357109731
Author: Hoffman
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 5, Problem 37P
To determine
Determine the amount R must include for different benefits received.
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Individual Income Taxes
Ch. 5 - Prob. 1DQCh. 5 - Prob. 2DQCh. 5 - Prob. 3DQCh. 5 - Prob. 4DQCh. 5 - Prob. 5DQCh. 5 - Prob. 6DQCh. 5 - Prob. 7DQCh. 5 - Holly was injured while working in a factory and...Ch. 5 - Prob. 9DQCh. 5 - Prob. 10DQ
Ch. 5 - Ted works for Azure Motors, an automobile...Ch. 5 - Prob. 12DQCh. 5 - Eagle Life Insurance Company pays its employees...Ch. 5 - Several of Egret Companys employees have asked the...Ch. 5 - Prob. 15DQCh. 5 - Tammy, a resident of Virginia, is considering...Ch. 5 - Andrea entered into a 529 qualified tuition...Ch. 5 - Prob. 18DQCh. 5 - Prob. 19DQCh. 5 - Valentino is a patient in a nursing home for 45...Ch. 5 - Prob. 21CECh. 5 - Ellie purchases an insurance policy on her life...Ch. 5 - Prob. 23CECh. 5 - Leland pays premiums of 5,000 for an insurance...Ch. 5 - Jarrod receives a scholarship of 18,500 from...Ch. 5 - Prob. 26CECh. 5 - Prob. 27PCh. 5 - Prob. 28PCh. 5 - Prob. 29PCh. 5 - LO.2 What is the taxpayers gross income in each of...Ch. 5 - LO.2 Donald was killed in an accident while he was...Ch. 5 - Prob. 32PCh. 5 - Prob. 33PCh. 5 - Prob. 34PCh. 5 - LO.2 Leigh sued an overzealous bill collector and...Ch. 5 - LO.2 Determine the effect on gross income in each...Ch. 5 - Prob. 37PCh. 5 - Prob. 38PCh. 5 - Prob. 39PCh. 5 - LO.2 Belinda spent the last 60 days of 2019 in a...Ch. 5 - LO.2 Tim is the vice president of western...Ch. 5 - LO.2 Does the taxpayer recognize gross income in...Ch. 5 - Prob. 43PCh. 5 - Prob. 44PCh. 5 - Prob. 45PCh. 5 - LO.2, 5 Rosas employer has instituted a flexible...Ch. 5 - Prob. 47PCh. 5 - Prob. 48PCh. 5 - Prob. 49PCh. 5 - Prob. 50PCh. 5 - LO.2 Tonya, who lives in California, inherited a...Ch. 5 - Prob. 52PCh. 5 - Prob. 53PCh. 5 - Prob. 54PCh. 5 - Prob. 55PCh. 5 - Prob. 56PCh. 5 - LO.4 Vic, who was experiencing financial...Ch. 5 - Prob. 1RPCh. 5 - Prob. 2RPCh. 5 - Prob. 3RPCh. 5 - Prob. 4RPCh. 5 - Prob. 1CPACh. 5 - Jeffrey Dean, a Masters Degree candidate at North...Ch. 5 - Linda is an employee of JRH Corporation. Which of...Ch. 5 - Kim was seriously injured at her job. As a result...Ch. 5 - Danny received the following interest and dividend...Ch. 5 - Prob. 6CPA
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- Tia is married and is employed by Carrera Auto Parts. In 2019, Carrera established high-deductible health insurance for all its employees. The plan has a 2,700 deductible for married taxpayers. Carrera also contributes 5 percent of each employees salary to a Health Savings Account. Tias salary is 30,000 in 2019 and 32,000 in 2020. Tia makes the maximum allowable contribution to her HSA in 2019 and 2020. She received 600 from the HSA for her 2019 medical expenses. In 2020, she spends 1,400 on medical expenses from her HSA. The MSA earns 28 in 2019 and 46 in 2020. a. What is the effect of the HSA transactions on Tias adjusted gross income? b. How much does Tia have in her HSA account at the end of 2020?arrow_forwardValentino is a patient in a nursing home for 45 days of 2019. While in the nursing home, he incurs total costs of 13,500. Medicare pays 8,000 of the costs. Valentino receives 15,000 from his long-term care insurance policy, which pays while he is in the facility. Assume that the Federal daily excludible amount for Valentino is 370. Of the 15,000, what amount may Valentino exclude from his gross income?arrow_forwardCharles E. Bennett, age 64, will retire next year and is trying to decide whether to begin collecting his Social Security benefits at that time. His monthly benefits will increase if he defers his starting date for the benefits. He has asked you to estimate how much his income tax will increase as a result of collecting Social Security. Charles and his wife Bernice B., file a joint return, have no other dependents, and claim the standard deduction. Their only income other than the Social Security benefits are: The Social Security benefits for the year would be 12,000. a. Complete Worksheet 1, Figuring Your Taxable Benefits, included in IRS Publication 915 to determine the taxable portion of this couples taxable Social Security benefits (the publication includes a blank worksheet). b. What is the taxable portion of the 12,000 in Social Security benefits?arrow_forward
- Greg died on July 1,2019 , and left Lea, his wife, a $45,000 life insurance policy which she elects to receive at $9,000 per year plus interest for 5 years. In the current year, Lea receives $9,500. How much should Lea include in her gross income? $____________arrow_forwardVirginia and Richard are married taxpayers with adjusted gross income of $28,000 in 2019 If Virginia is able to make a $1,500 contribution to her IRA and Richard makes a $1,500 contribution to his IRA, what is the Saver's Credit Virginia and Richard will be eligible for? $0 $1,500 $2,000 $3,000 $4,000arrow_forwardIn 2019, Lou has a salary of $53,300 from her job. She also has interest income of $1,600 and dividend income of $ 400. Lou is single and has no dependents. During the year, Lou sold silver coins held as an investment for a $7,000 loss. Calculate the following amounts for Lou: Adjusted gross income $ ____________________ Standard deduction $ ____________________ Taxable income $ ____________________arrow_forward
- Alton Newman, age 67, is married and files a joint return with his wife, Clair, age 65. Alton and Clair are both retired, and during 2018, they received Social Security benefits of 10,000. Both Alton and Clair are covered by Medicare. Altons Social Security number is 111-11-1119, and Clairs is 123-45-6786. They reside at 210 College Drive, Columbia, SC 29201. Alton, who retired on January 1, 2018, receives benefits from a qualified pension plan of 2,750 a month for life. His total contributions to the plan (none of which were deductible) were 168,250. In January 2018, he received a bonus of 2,000 from his former employer for service performed in 2017. No income taxes were withheld on this bonus by his former employer (Amalgamated Industries, Inc.; EIN 12-3456789; 114 Main Street, Columbia, SC 29201). Although Amalgamated Industries, Inc., accrued the bonus in 2017, it was not paid until 2018. Clair, who retired on December 31, 2017, started receiving benefits of 1,400 a month on January 1, 2018. Her contributions to the qualified pension plan (none of which were deductible) were 74,100. On September 27, 2018, Alton and Clair received a pro rata 10% stock dividend on 600 shares of stock they owned. They had bought the stock on March 5, 2011, for 20 a share. On December 16, 2018, they sold the 60 dividend shares for 55 a share. On October 10, 2018, Clair sold the car she had used in commuting to and from work for 17,000. She had paid 31,000 for the car in 2012. On July 14, 2010, Alton and Clair received a gift of 1,000 shares of stock from their son, Thomas. Thomass basis in the stock was 35 a share (fair market value at the date of gift was 25). No gift tax was paid on the transfer. Alton and Clair sold the stock on October 8, 2018, for 24 a share. On May 1, 2018, Clairs mother died, and Clair inherited her personal residence. In February 2018, her mother had paid the property taxes for 2018 of 2,100. The residence had a fair market value of 235,000 and an adjusted basis to the mother of 160,000 on the date of her death. Clair listed the house with a real estate agent, who estimated it was worth 240,000 as of December 31, 2018. Clair received rent income of 6,000 on a beach house she inherited three years ago from her uncle Charles. She had rented the property for one week during the July 4 holiday and one week during the Thanksgiving holiday. Charless adjusted basis in the beach house was 150,000, and its fair market value on the date of his death was 240,000. Clair and Alton used the beach house for personal purposes for 56 days during the year. Expenses associated with the house were 3,700 for utilities, maintenance, and repairs; 2,200 for property taxes; and 800 for insurance. There are no mortgages on the property. Clair and Alton paid estimated Federal income tax of 2,000 and had itemized deductions of 6,800 (excluding any itemized deductions associated with the beach house). If they have overpaid their Federal income tax, they want the amount refunded. Both Clair and Alton want 3 to go to the Presidential Election Campaign Fund. Compute their net tax payable or refund due for 2018, using the appropriate tax rate schedule (not the Tax Tables). If you use tax forms for your computations, you will need at a minimum Form 1040 and Schedule D. Suggested software: ProConnect Tax Online.arrow_forwardPaul Barrone is a graduate student at State University. His 10-year-old son, Jamie, lives with him, and Paul is Jamies sole support. Pauls wife died in 2018, and Paul has not remarried. Paul received 320,000 of life insurance proceeds (related to his wifes death) in early 2019 and immediately invested the entire amount as shown below. Paul had 42,000 of taxable graduate assistant earnings from State University and received a 10,000 scholarship. He used 8,000 of the scholarship to pay his tuition and fees for the year and 2,000 for Jamies day care. Jamie attended Little Kids Daycare Center, a state-certified child care facility. Paul received a statement related to the Green bonds saying that there was 45 of original issue discount amortization during 2019. Paul maintains the receipts for the sales taxes he paid of 735. Paul lives at 1610 Cherry Lane, Bradenton, FL 34212, and his Social Security number is 111-11-1111. Jamies Social Security number is 123-45-6789. The university withheld 2,000 of Federal income tax from Pauls salary. Paul is not itemizing his deductions. Part 1Tax Computation Compute Pauls lowest tax liability for 2019. Part 2Tax Planning Paul is concerned because the Green bonds were worth only 18,000 at the end of 2019, 5,000 less than he paid for them. He is an inexperienced investor and wants to know if this 5,000 is deductible. The bonds had original issue discount of 2,000 when he purchased them, and he is curious about how that affects his investment in the bonds. The bonds had 20 years left to maturity when he purchased them. Draft a brief letter to Paul explaining how to handle these items. Also prepare a memo for Pauls tax file.arrow_forward
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