Question

Compute Emily's 2018 taxable income on the basis of the following information. Her filing status is single. Salary $85,000 Interest income from bonds issued by Xerox 1,100 Alimony payments received (divorce finalized in 2014) 6,000 Contribution to traditional IRA 5,500 Gift from parents 25,000 Capital gain from stock investment, held for 7 months 2,000 Amount lost in football office betting pool 500 Age 40

Answer 1

Answer:

The  Emily's 2018 taxable income is $76,600

Explanation:

The computation of the taxable income for the year 2018 is shown below:

= Salary + interest income from bonds issued by Xerox + Alimony payments received + Capital gain from stock investment, held for 7 months - Contribution to traditional IRA - standard deduction

= $85,000 + $1,100 + $6,000 + $2,000 - $5,500 - $12,000

= $76,600

The standard deduction for married and single tax payers is $12,000

And, the Gift from parents  is not taxable  & Amount lost in football office betting pool is not allowed for deduction as it is come under gambling.