Compute Aiden’s 2018 taxable income on the basis of the following information. A

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.

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 $

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 due to the death of Aunt Margie (Aiden was the designated beneficiary of the policy) 200,000 Inheritance received on death of Aunt Margie 100,000 Jackson (a cousin) repaid a loan Aiden made to him in 2010 (no interest was provided for) 5,000 Itemized deductions (state income tax, property taxes on residence, interest on home mortgage, charitable contributions) 9,700 Number of dependents (children, ages 17 and 18; mother-in-law, age 60) 3 Age 43

Explanation / Answer

Solution:

Answer a. The items are taxable or not taxable to Aiden:

Answer b. Aiden's filing status:

Answer c.  

Answer d.  Aiden's taxable income in 2018 :

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 a CD issued by Wells Fargo Bank Taxable Inheritance received upon the death of his aunt Non-Taxable Proceeds from repayment of a loan Non-Taxable

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