Compute Aiden\'s 2018 taxable income on the basis of the following information.

Question

Compute Aiden's 2018 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 Salary Interest on bonds issued by City of Bostorn Interest on CD issued by Wells Fargo Bank Cash dividend received on Chevron common stock Life insurance proceeds paid due to the death of Aunt Margie (Aiden was the designated beneficiary of the policy) Inheritance received on death of Aunt Margie Jackson (a cousin) repaid a loan Aiden made to him in 2010 (no interest was provided for) Itemized deductions (state income tax, property taxes on residence, interest on home mortgage charitable contributions) Number of dependents (children, ages 17 and 18; mother-in-law, age 60) Age $80,000 3,000 2,000 2,200 200,000 100,000 5,000 9,700 43

Explanation / Answer

a Indicate whether the items are taxable or not Cash dividend received on Chevron common Stock Taxable Salary Taxable Interest on bonds issued by City of Boston Non-taxable Life Insurance Proceeds Non-taxable Interest on CD issued by Wells fargo bank Taxable Inheritance received on death of Aunt Margie Non-taxable Proceed from repayment of a loan Non-taxable b What is Aiden's filling Status Married filling separately c Should Aiden itemized his deductions or take the standard deduction? He should take standard deduction as it $12000 whereas itemized deduction is only $9700 d Aiden's Taxable income in 2018 Cash dividend received on Chevron common Stock $2,200 Salary $80,000 Interest on CD issued by Wells fargo bank $2,000 AGI $84,200 Less: Standard deduction $12,000 Taxable income $72,200

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