Determine the taxable amount of social security benefits for the following situations.

a. Erwin and Eleanor are married and file a joint tax return. They have adjusted gross income of $42,600, no tax-exempt interest, and $14,910 of Social Security benefits. As a result, $_____ of the Social Security benefits are taxable.

b. Assume Erwin and Eleanor have adjusted gross income of $17,800, no tax-exempt interest, and $19,580 of Social Security benefits. As a result, $____ of the Social Security benefits are taxable.

c. Assume Erwin and Eleanor have adjusted gross income of $97,000, no tax-exempt interest, and $14,550 of Social Security benefits. As a result, $_____ of the Social Security benefits are taxable.

2)

Simba and Zola are married but file separate returns. Simba received $77,200 of salary and $9,900 of taxable dividends on stock he purchased in his name and paid from the salary that he earned since the marriage. Zola collected $7,425 in taxable interest on certificate of deposit that she inherited from her aunt. Compute Zolas gross income under two assumptions as to the state of residency of the couple.

If an amount is zero, enter "$0."

	Idaho (Community Property State)	South Carolina (Common Law State)
Dividends	$___?	$0
Interest	$7,425	$7,425
Salary	$___?	$0

3)

Elizabeth made the following interest-free loans during the year. Assume that tax avoidance is not a principal purpose of any of the loans. Assume that the relevant Federal rate is 5% and that the loans were outstanding for the last six months of the year.

Borrower	Amount		Borrowers Net Investment Income			Purpose of Loan
Richard	$5,250		$0			Gift
Woody	$6,300		$600			Purchase stock
Irene	$134,000		$0			Purchase residence

What are the effects of the imputed interest rules on these transactions? If required, round your final answer to the nearest dollar.

a. Richard is not subject to the imputed interest rules because the $10,000 exception does apply.

b. The $10,000 exception does not apply to the loan to Woody because the proceeds were used to purchase income producing assets. Because the $1,000 exception applies to this loan, no interest is imputed.

c. None of the exceptions apply to the loan to Irene because the loan was for more than $100,000.

As a result of these transactions, Elizabeth has interest income of $____?