25. Billy Dent has the following rental income: (1) Rent received in January 2009, but due in December 2008 $5,000 (2) Rent received in December 2009, not due until January 2010 4,000 Total rental income $9,000 The security deposit is not considered income because it is refundable. 32. Under tax law, property transferred pursuant to a divorce decree does not give rise to income. Therefore, item (a) does not generate income. Item (b) is not treated as alimony. The payments do not end on death. Item (c) generates a tax deduction of $1,500 per month for Arnold and income to Barbara of $1,500 per month. Child support is not tax deductible nor is it included in the gross income of the recipient. 38. Robert Reed’s taxable income is $26,850, computed as follows: Salary $45,000 Interest on bank accounts 800 Dividends 500 Rental income 3,000 Rental income (December and January) 500 Gross income $49,800 Less: Itemized deductions 12,000 $37,800 Less: Exemptions (3 × $3,650) 10,950 Taxable income
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This note was uploaded on 11/03/2010 for the course AC553 553 taught by Professor Online during the Summer '10 term at Keller Graduate School of Management.