60.1K

Verified Solution

Link Copied!

Required information

Comprehensive Problem $5-75($LO $5-1,$ LO $5-2,$ LO $5-3)($Algo$)$

$[$The following information applies to the questions displayed below.$]$

Ken is $63$ years old and unmarried. He retired at age $55$ when he sold his business, Understock com. Though Ken is

retired, he is still very active. Ken reported the following financial information this year. Assume Ken files as a single

taxpayer.

a$.$ Ken won $$1,640$ in an illegal game of poker $($the game was played in Utah, where gambling is illegal$).$

b$.$ Ken sold $1,440$ shares of stock for $$32$ a share. He inherited the stock two years ago. His tax basis $($or investment$)$ in the

stock was $$31$ per share.

c$.$ Ken received $$29,400$ from an annuity he purchased eight years ago. He purchased the annuity, to be paid annually for

$20$ years, for $$246,960.$

d$.$ Ken received $$14,100$ in disability benefits for the year He purchased the disability insurance policy last year.

e$.$ Ken decided to go back to school to learn about European history. He received a $$940$ cash scholarship to attend. He

used $$520$ to pay for his books and tuition, and he applied the rest toward his new car payment.

f$.$ Ken's son, Mike, instructed his employer to make half of his final paycheck of the year payable to Ken as a gift from

Mike to Ken. Ken received the check on December $30$ in the amount of $$1,760.$

g$.$ Ken received a $$830$ refund of the $$4,040$ in state income taxes his employer withheld from his pay last year. Ken

claimed $$13,440$ in itemized deductions last year $($the standard deduction for a single filer was $$12,950).$

h$.$ Ken received $$34,400$ of interest from corporate bonds and money market accounts.

Comprehensive Problem $5-75$ Part$-1($Algo$)$

Determine Ken's gross income.

Gross income

Answer & Explanation Solved by verified expert

See Answer