Compute the taxable income for 2007 for Marjory on the basis of the following information. Marjory is married but has not seen or heard from her husband since 2005.
Interest on bonds issued by city of Independence (MO) 2,000
Interest on CD issued by Hivernia National Bank 1,800
Cash Dividend received on GE common stock 2,300
Life insurance proceeds paid on death of aunt
(Marjory was the desgnated beneficiary of the policy) 50,000
Inheritance received on death of aunt 110,000
Carlton (a cousin) repaid a loan Marjory made to him
in 2004 (no interest was provided) 5,000
Itemized deductions (state income tax, propery tax on
residence, interst on home mortgage, charitable
Number of Dependants (children ages 13 & 15) 2
Standard deduction for 2007 for head of household is $7850.
Personal exemptions are $3400 each.
Salary - yes
Tax exempt bonds - no
CD interest - yes
GE dividend - yes
Life insurance ...
Taxable income calculations are shown for Marjory together with a brief explanation of why several items are excluded from the calculations.