Question: Cecil C. Seymour is a 64-year-old widower. He had income for 2014 as follows: Pension from former employer ..................................................... $39,850 Interest income from Alto National

Cecil C. Seymour is a 64-year-old widower. He had income for 2014 as follows:

Pension from former employer ..................................................... $39,850

Interest income from Alto National Bank ............................................ 5,500

Interest income on City of Alto bonds ............................................... 4,500

Dividends received from IBM ......................................................... 2,000

Collections on annuity contract he purchased from Great Life Insurance ....... 5,400

Social Security benefits ............................................................... 14,000

Rent income on townhouse ........................................................... 9,000

The cost of the annuity was $46,800, and Cecil was expected to receive a total of 260 monthly payments of $450. Cecil has received 22 payments through 2014.

Cecil's 40-year-old daughter, Sarah C. Seymour, borrowed $60,000 from Cecil on January 2, 2014. She used the money to start a new business. Cecil does not charge her interest because she could not afford to pay it, but he does expect to eventually collect the principal. Sarah is living with Cecil until the business becomes profitable. Except for housing, Sarah provides her own support from her business and $1,600 in dividends on stocks that she inherited from her mother.

Other relevant information is presented below:

• Cecil's Social Security number: 123-45-6785

• Address: 3840 Springfield Blvd., Alto, GA 30510

• Sarah's Social Security number: 123-45-6784

• Expenses on rental townhouse:

Utilities ............................. $2,800

Maintenance ........................ 1,000

Depreciation ........................ 2,000

Real estate taxes ...................... 750

Insurance .............................. 700

• State income taxes paid: $3,500

• County personal property taxes paid: $2,100

• Payments on estimated 2014 Federal income tax: $5,900

• Charitable contributions of cash to Alto Baptist Church: $6,400

• Federal interest rate: 6%

• Sales taxes paid: $912

Compute Cecil's 2014 Federal income tax payable (or refund due)?

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Gross income Pension 39850 Interest income Note 1 5500 Dividend income 2000 Annuity income Note 2 3240 Social Security benefits Note 3 11900 Imputed interest on gift loan Note 4 1600 Net rent income N... View full answer

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