Question

For each of the following independent situations, determine the amount, if any, that the taxpayer must recognize in 2019.

a. Ross filed his tax return, properly claiming single filing status. His employer paid or provided the following to Ross:

       Wages                                                                                  $58,500

       Fair market value of qualified dependent care services                      4,800

       Premiums for $45,000 qualified group term life insurance                   1,300

       Medical insurance premiums paid by employer                                   900

What is the amount, if any, that will be included in gross income in 2019?

b. The Central Perk Coffee Shop gives all 3 of its employees’ free coffee. The fair market value of this coffee to an employee is $1.00/month. What is the amount, if any, will each employee include in his gross income in 2019 for these gifts?

c. Ross, a police officer, was injured in the line of duty. He received the following during 2019:

                                                        Salary                                                                                                                                                           $60,000

           Unemployment compensation                                                                                              9,000

           Compensatory damages for physical injury                                                         28,000

           Punitive damages for physical injury                                                                        25,000

           Cash reward for preventing a house from being robbed                         7,200

        

What is the amount, if any, that will be included in gross income in 2019?

d. Central Perk Coffee Company is an off‑shore exploration and production company. As a condition of employment, Central Perk requires all of its employees to be on 24‑hour call for emergencies and requires all of their employees to live in rent-free company-provided housing (value of $50,000 per year). Ross, an employee of Central Perk, receives a salary of $89,500 per year.

    How much, if any, will Ross include in his taxable income in 2019?

e. Ross receives a $24,750 per year scholarship from University of Hawaii. The University specifies that $19,500 is for tuition, books, supplies, and equipment required for classes. The remaining portion is for room and board. As part of the condition of the scholarship, Ross must also work twelve hours per week as a grader, for which he is paid $10,500 for the year.

Of the total amount received, how much, if any, must Ross include in taxable income?

Answer 1

Sheridan Labs inc
Income Statement
For the Month Ended November 30,2020
Sales Revenue			$ 79,200.00
Cost of service provided			$ 62,160.00
Gross profit (at Standard)			$ 17,040.00
variances
materials price variance	$    252.00	Favourable
Materials quantity variance	$    168.00	UnFavourable
Labour price variance	$ 1,236.00	Favourable
labour quantity variance	$ 1,080.00	UnFavourable
overhead variance	$ 1,140.00	Favourable
Total variance		Favourable	$   1,380.00
Gross profit Actual			$ 18,420.00
Selling and administrative expense			$   4,300.00
Net income /(loss)			$ 14,120.00