Abe is the single 66 year old uncle of Jacob. For the entire calendar year
of 2005, Jacob lived in Abe's home, and Abe provided 65% of the support
for jacob. Abe has salary income
of $21,000. Abe's wife passed away in
Jacobs mother and father also died in 2004. As their surviving child
was named the beneficiary
of a life insurance policy. The face amount of
the policy was $100,000 but Jacob elected to receive the payments over a
5 year period, 5 equal payments of $24,000 beginning in 2005. ($4,000
is treated as taxable interest
1a. what is Abe's tax liability
or refund for 2005? Clearly indicate Abe's
status and the number of allowable exemptions.
1b. Determine Jacob's tax liability.