Compute the taxable social security benefits in each

  • Baruch College, CUNY
  • TAXA 9861
  • Notes
  • summerbaruch
  • 12
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Compute the taxable Social Security benefits in each of the following situations: a. Erwin and Eleanor are married and file a joint tax return. They have adjusted gross income of $46,000, no tax-exempt interest, and $12,400 of Social Security benefits. b. Erwin and Eleanor have adjusted gross income of $12,000, no tax-exempt interest, and $16,000 of Social Security benefits. c. Erwin and Eleanor have adjusted gross income of $85,000, no tax-exempt interest, and $15,000 of Social Security benefits. Chap 5 Lime Finance Company requires its customers to purchase a credit life insur- ance policy associated with the loans it makes. Lime is the beneficiary of the policy to the extent of the remaining balance on the loan at the time of the custom- er’s death. In 2014, Lime wrote off as uncollectible a $5,000 account receivable from Wally, which included $1,500 of accrued interest.
When Wally died in 2015, the life insurance policy was still in force and Lime received $3,500. Is the $3,500 of life insurance proceeds received by Lime included in its gross income? Explain.
Billy fell off a bar stool and hurt his back. As a result, he was unable to work for three months. He sued the bar owner and collected $100,000 for the phys- ical injury and $50,000 for the loss of income. Billy also collected $15,000 from an income replacement insurance policy he purchased. Amber was away from work for three months following heart bypass surgery. Amber collected $30,000 under an income replacement insurance policy purchased by her employer. Are the amountsreceived by Billy and Amber treated the same under the tax law? Explain.

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