Reference no: EM133135879
Question - Other Income - Mrs. Vick, a 40-year-old cash basis taxpayer, earned $45,000 as a teacher and $5,000 as a part-time, self-employed real estate agent in Year 5. Mr. Vick, who died on July 1, Year 5, had been permanently disabled on his job and collected state disability benefits until his death. For all of Year 5 the Vicks' residence was the principal home of both their 11-year-old daughter, Joan Vick, and Mrs. Vick's unmarried cousin, Fran Phillips, who had no income in that year. During Year 5, Joan received $200 a month in survivor Social Security benefits that began on August 1, Year 5, and will continue at least until her 18th birthday. In Year 5, Mrs. Vick provided over one-half of the support for Joan and Fran, both of whom were U.S. citizens. Mrs. Vick did not remarry. Mr. and Mrs. Vick received the following in Year 5:
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Earned income
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$50,000
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State disability benefits (workmen's comp)
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1,500
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Interest on:
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Refund from amended tax return
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50
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Savings account and certificates of deposit
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350
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Municipal bonds
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100
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Gift
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3,000
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Pension benefits
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2,000
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Jury duty pay
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200
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Gambling winnings
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450
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Life insurance proceeds
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5,000
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Additional Information
Mrs. Vick received the $3,000 cash gift from her uncle.
Mrs. Vick received the pension distributions from a qualified pension plan, paid for exclusively by her husband's employer.
Mrs. Vick had $100 in gambling losses.
Mrs. Vick was the beneficiary of the life insurance policy on her husband's life. She received a lump-sum distribution. The Vicks had paid $500 in premiums.
Mrs. Vick received Mr. Vick's accrued vacation pay of $500 in Year 6.
Mrs. Vick did not itemize deductions on her Form 1040 for Year 4.
Mrs. Vick does not intend to itemize deductions on her Form 1040 for Year 5.
Mrs. Vick had a total of $6,125 in federal tax withheld in Year 5.
The Vicks did not qualify for a federal or state tax refund in Year 4.
Required - Determine the amount of income that needs to be reported for each of the following income sources.
What is the taxable amount of Mr. Vick's state disability benefits that should be included in adjusted gross income (AGI)?
What is the taxable amount of the gift that should be included in AGI?
What is the taxable amount of the life insurance proceeds that should be included in AGI?
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