Mark, a cash-basis taxpayer, died on September 30, 2018. His wife, Charlotte, provides you with the following information.From January 1, 2018 until his death, Mark received a salary of $35,000. Charlotte received a salary of $68,000 during 2018. Mark had earned commissions of $20,000 which Charlotte received after his death. Charlotte was the beneficiary of a $100,000 whole life policy purchased by Mark and a $50,000 group term life insurance policy purchased by Mark's employer. The employer had paid premiums of $250 on Mark's behalf. In addition, the corporation paid Charlotte a $10,000 employee death benefit in Mark's name. All employees' families received similar benefits regardless of financial need. Mark and Charlotte had itemized deductions of $25,600. What is the amount of their
taxable income on their 2018 tax return?
What will be an ideal response?
| Mark's salary | $ 35,000 |
| Charlotte's salary | 68,000 |
| Mark's commissions | 20,000 |
| Death benefit | 10,000 |
| Gross income/Adjusted Gross Income | $133,000 |
| From AGI (> standard deduction or itemized deductions) | ( 25,600) |
| Taxable income | $107,400 |
Life insurance proceeds paid by reason of death are not included in taxable income. The amount of employer-paid premiums of $250 is not included in taxable income since the employer provided $50,000 of group-term coverage.
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