Exam Question 15 of 25 Select the best answer Lin received a lump-sum payment of

Question

Exam Question 15 of 25 Select the best answer Lin received a lump-sum payment of $10,000. The payment is for Social Security benefits that were due her in 1991 ($7,000) and 1992 ($3,000). For the current year, she has a marginal tax rate of 30% and 85% of all Social Security benefits are included in gross income. For 1991 and 1992, 50% of all Social Security benefits were included in gross income. What is the least amount of the lump-sum payment that Lin can include in this year's gross income if she does not have and cannot obtain any of her past tax forms? A. $O O B. $5,000 C. $8,500 O D. $10,000

Explanation / Answer

What is the least amount LIN can include this year's gross income? LIN's tax rate 30% Percentage of Social Securty benefits included in Gross Income 85% Least amount of the lump sum of $10000 that LIN can include in her gross income for the current year If LIN's combined is more than 34000 85% is taxable If LIN's combined is less than 25000 0% is taxable The best answer appears to be D $10,000 As LIN has paid no tax on this amount in the past and she cannot produce her tax returns for 1991 and 1992 to show how much is taxable

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