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8. Kenton has assets of $250,000 and liabilities of $500.000. One of his debtors forgives $100,000 $100,000 is excluded from
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8. Kenton has assets of $250,000 and liabilities of $500.000. One of his debtors forgives $100,000 of debt. How much of the $100,000 is excluded from Kenton's gross income?
Answer: Option d. $100,000
Reason: When the debt is bad, then the total bad debt should be excluded from the gross total income in that year only.
9. Which of the following is not excluded from gross income?
Answer: Option a. Medical Insuranceprovided by an employer
Reason: Medical insurance provided by an employer is treated as a perquisite and it is to included in Gross Income and taxable.
10. James is injured when the ski lift in which he is riding collaneae The ski lift operator's insurance pays him $6,000 for Medial reimbursement. $7,000 for lost wages while recovering, and $20,000 in punitive damages for negligence on the part or cu How much of the proceeds are included in James' gross income?
Answer: Option d. $20,000
Reason: Payment received for medical expenses for personal injury should be considered as income and $7,000 loss of income payment is made on account of personal injury, it qualifies for exclusion. The punitive damages $20,000 received is only considered as an income.
11. Interest received from which of the following would be excluded from gross income?
Answer: Option C. General Motors OID Bonds
Reason: Interest is not received on OID Bonds and therefore excluded from gross income.
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