What is Fred's total income for tax purposes this year? A) $80,000 B) $82,000 C) $75,000 D) $77,000 Answer: Fred's total taxable income, which includes his salary, interest income, and capital gain, amounts to $77,000 excluding the non-taxable inheritance. Explanation: To calculate Fred's total income for tax purposes, we should include all taxable sources of income. His salary of $70,000 is taxable, as is the interest income of $3,000 and the capital gain of $4,000 from selling stock. The inheritance is generally not taxable for federal income tax purposes, so we should exclude the $5,000 inheritance from the total. Adding up the taxable income sources, we get a total of $77,000 ($70,000 + $3,000 + $4,000), which corresponds to option D in the question provided.

Question

What is Fred's total income for tax purposes this year? A) $80,000 B) $82,000 C) $75,000 D) $77,000   Answer: Fred's total taxable income, which includes his salary, interest income, and capital gain, amounts to $77,000 excluding the non-taxable inheritance.    Explanation: To calculate Fred's total income for tax purposes, we should include all taxable sources of income. His salary of $70,000 is taxable, as is the interest income of $3,000 and the capital gain of $4,000 from selling stock. The inheritance is generally not taxable for federal income tax purposes, so we should exclude the $5,000 inheritance from the total. Adding up the taxable income sources, we get a total of $77,000 ($70,000 + $3,000 + $4,000), which corresponds to option D in the question provided.

Lawson · Answer

Answer: Fred's total taxable income, which includes his salary, interest income, and capital gain, amounts to $77,000 excluding the non-taxable inheritance.

Income Calculation for Tax Purposes

What is Fred's total income for tax purposes this year?

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