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e Cecil C. Seymour is a 64-year-old widower. He had income for 2019 as follows: Pension from former employer $39,850 Interest income from Alto National Bank 5,500 Interest income on City of Alto bonds Dividends received from IBM stock held for over one year 4,500 2,000 Collections on annuity contract he purchased from Great Life Insurance 5,400 Social Security benefits Rent income on townhouse 14,000 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 2019. Cecil's 40-year-old daughter, Sarah C. Seymour, borrowed $60,000 from Cecil on January 2, 2019. 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 collect the principal eventually. Sarah is living with Cecil until the business becomes profit- able. 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: Expenses on rental townhouse: Utilities $2,800 Maintenance 1,000 Depreciation boll 2,000 oldons dse Real estate taxes 750 lagod pa vn Insurance 700 State income taxes paid: $3,500 County personal property taxes paid: $2,100 Payments on estimated 2018 Federal income tax: $5,900 Charitable contributions of cash to Alto Baptist Church: $7,400 Federal interest rate: 6% Sales taxes paid: $912 Compute Cecil's 2019 Federal income tax payable (or refund due).

e Cecil C. Seymour is a 64-year-old widower. He had income for 2019 as follows: Pension from former employer $39,850 Interest income from Alto National Bank 5,500 Interest income on City of Alto bonds Dividends received from IBM stock held for over one year 4,500 2,000 Collections on annuity contract he purchased from Great Life Insurance 5,400 Social Security benefits Rent income on townhouse 14,000 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 2019. Cecil's 40-year-old daughter, Sarah C. Seymour, borrowed $60,000 from Cecil on January 2, 2019. 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 collect the principal eventually. Sarah is living with Cecil until the business becomes profit- able. 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: Expenses on rental townhouse: Utilities $2,800 Maintenance 1,000 Depreciation boll 2,000 oldons dse Real estate taxes 750 lagod pa vn Insurance 700 State income taxes paid: $3,500 County personal property taxes paid: $2,100 Payments on estimated 2018 Federal income tax: $5,900 Charitable contributions of cash to Alto Baptist Church: $7,400 Federal interest rate: 6% Sales taxes paid: $912 Compute Cecil's 2019 Federal income tax payable (or refund due).

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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**Tax Computation Problem** **Scenario:** Cecil S. Seymour is a 64-year-old widower with an income for 2019 as follows: 1. **Pension** from former employer (City of Naborhood National Bank): $9,850 2. **Interest on CD** held for over one year at Penn Mutual Savings Bank: $4,500 3. **Dividends** received from Bell Telephone common stock: $3,000 4. **Life insurance annuity** contract from Great Life Insurance: $5,000 5. **Rent income on townhouse**: $9,000 The cost of the annuity was $46,800, and Cecil was expected to receive a total of 20 annual payments of $5,000. Cecil’s dependent daughter, Sarah, received $2,000 from Cecil on January 2, 2019. She used some of this money to start a new business. Sarah borrowed $6,000 from Cecil under a note due in 10 years with 8% interest because she could not afford to pay it. Cecil does not expect to collect the principal eventually. Sarah provides her own support from her business earnings. Other relevant information is presented below from her mother. **Expenses on Rental Townhouse:** - **Utilities**: $2,800 - **Maintenance**: $2,000 - **Repairs**: $750 - **Real Estate Taxes**: $700 **Additional Details:** - State income taxes paid: $3,500 - County personal property taxes paid: $2,100 - Federal interest rate: 8% - Sales taxes paid: $192 - Federal income tax: $5,900 - Charitable contributions of cash to Alto Baptist Church: $7,400 **Task:** Compute Cecil's 2019 federal income tax payable (or refund due).
Transcribed Image Text:**Tax Computation Problem** **Scenario:** Cecil S. Seymour is a 64-year-old widower with an income for 2019 as follows: 1. **Pension** from former employer (City of Naborhood National Bank): $9,850 2. **Interest on CD** held for over one year at Penn Mutual Savings Bank: $4,500 3. **Dividends** received from Bell Telephone common stock: $3,000 4. **Life insurance annuity** contract from Great Life Insurance: $5,000 5. **Rent income on townhouse**: $9,000 The cost of the annuity was $46,800, and Cecil was expected to receive a total of 20 annual payments of $5,000. Cecil’s dependent daughter, Sarah, received $2,000 from Cecil on January 2, 2019. She used some of this money to start a new business. Sarah borrowed $6,000 from Cecil under a note due in 10 years with 8% interest because she could not afford to pay it. Cecil does not expect to collect the principal eventually. Sarah provides her own support from her business earnings. Other relevant information is presented below from her mother. **Expenses on Rental Townhouse:** - **Utilities**: $2,800 - **Maintenance**: $2,000 - **Repairs**: $750 - **Real Estate Taxes**: $700 **Additional Details:** - State income taxes paid: $3,500 - County personal property taxes paid: $2,100 - Federal interest rate: 8% - Sales taxes paid: $192 - Federal income tax: $5,900 - Charitable contributions of cash to Alto Baptist Church: $7,400 **Task:** Compute Cecil's 2019 federal income tax payable (or refund due).
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