Assignment:
Part One
Joe and Kathy will file a joint tax return for 2016. Joe retired December 15,2016 and began to recieve social security benefits in 2016 which totaled $7,200 for 2016. Kathy has not worked for several years and is not yet recieving social security benefits. Kathy's mother passed away in 2015 and as a result, Kathy inherited her mother's investment portfolio, which consisted of municipal bonds and equity securities. During 2016, Kathy received $6,000 of tax-free interest income on various muni-bonds.
Additionally, she received a total of $13,000 in dividends from the equity securities, of which $10,000 were qualified dividends. Joe also began to draw upon his pension, and he received total taxable retirement benefits in 2016 of $11,000. Finally, Joe's uncle made a personal gift of cash to Joe in the amount of $12,000.
How much of Joe's social security benefits are included in gross, taxable income for 2016?
Part two
Same as above, except that in 2016, Kathy also sold some of the municiple bonds and will recognize a long-term capital gain of $5,000. And she sold some of the equity securities and will recognize a long-term capital gain of $15,000.
How much of Joe's social security is included in gross, taxable income for 2016?