Select the best answer. Todd distributes $20,000 from his IRA in the first half

Question

Select the best answer. Todd distributes $20,000 from his IRA in the first half of 2017. The market value of the IRA is $83,333 on December 31, 2016, and $100,000 on December 31, 2017. If Todd had a basis of $5,000 in his IRA as of December 31, 2016, and he made no contributions during 2017, what portion of the $20,000 distribution is included in gross income for 2017? (Use two places after the decimal point to calculate the exclusion ratio.) A. $O B. $800 C. $19,200 D. $20,000 Type here to search

Explanation / Answer

Given

Tax distribution $20,000

basis of Todd =$5000 per year

per two year $10,000

Market value of 2017 dec =$100,000

basis deduction for 2017 dec= 90,000

10% deduction as penality on distribution = $20,000*0.1

= $ 2000

basis $5000 = 2000+5000 =7000

Now amount gross;

20,000-7000 = $13000

Half month = 13000+13000

=26000

But dec 2017= 90,000/2

= 45000

  

Gross income = $800

  

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