Reference no: EM132955157

Carl Baker is a 63-year-old widower. He had income for 202X as follows:

Pension from former employee $39850

Interest income from Bean Bank $5500

Interest income on City of Bean bonds $4500

Dividends received from Costco stock held for over one year. $2000

Social security benefits $14000

Rent income on house $9000

Collections on annuity contract he purchased from Good Intentions Insurance: $5400

The cost of the annuity was $46800 and Carl was expected to receive a total of 260 monthly payments of $450. Carl has received 22 payments so far through 202X.

Carl's daughter, Sasha (who is 40 years old), borrowed $60k from Carl on January 5th, 202X and used the proceeds to form a new business. He does not charge Sasha interest because she couldn't afford it. However, he does expect to collect the principal eventually. Sasha is living with Carl until the business becomes profitable. Except for housing, Sasha provides her own support from her business and $1600 in dividends on stocks she received/inherited from her mother.

Other relevant information on the rental home:

Utilities = $2800

Maintenance costs - $1000

Depreciation = $2000

Real estate taxes = $750

Insurance = $700

State income taxes paid = $3500

County personal property taxes paid = $2100

Payments on estimated 2017 FIT = $5900

Charitable contributions of cash to Bean Church = $7400

Federal interest rate 6%

Sales taxes paid = $912

Required:

Problem 1: Determine Carl's Federal tax for 202X