Reference no: EM13350326

Question

A) Calculate the taxable income for 2012 for Aiden on the basis of the following information. Aiden is married however has not seen or heard from his wife since 2010

Interest on bonds issued by City of Boston $80,000

Interest on CD issued by Wells Fargo Bank $3,000

Cash dividend received on Chevron common stock $2,000

Life insurance proceeds paid on death of Aunt Margie (Aiden was the designated beneficiary of the policy) $200,000

Inheritance received on death of Aunt Margie $100,000

Jackson (a cousin) repaid a loan Aiden made to him in 2008 $5,000

(No interest was provided for)

Itemized deductions (State income tax, property taxes on residence, interest on home mortgage, charitable contributions). $9,000

Number of dependents (children, ages 17 and 18, mother in-law, age 60) 3 Age 43

B) Christopher died in 2010 as well as is survived by his wife, Chloe, and their 18-year-old son Dylan. Chloe is the executor of Christopher's estate as well as maintains the household in which she and Dylan live. All of their support is furnished by Chloe. Dylan saves his earnings. Dylan reports the following information

What is Chloe's Federal income tax filing status for-

a) 2010?

b) 2011?

c) 2012?

C) Each year the Hundleys normally report listed deductions of $10,000, including a $4,000 pledge payment to their church. Upon the advice of a friend they do the following- in early January 2012, they pay their pledge for 2011, during 2012, they remuneration the pledge for 2012 and in late December 2012, they prepay their pledge for 2013

a) Describe what the Hundleys are trying to accomplish

b) What will be the tax saving if their marginal tax bracket is 25% for all three years? (Accept that the standard deduction amounts for 2012 and 2013 are the same.)