Question

Determine if the following are included or excluded from gross income. Min receives a $20,000 tuition scholarship to attend State University. A. Excluded B. Included Sam receives an automobile worth $65,000 for being the MVP of the Super Bowl. Caitlyn receives $3,000 of unemployment. Nora is covered under a $30,000 group life insurance policy from her employer. The employer paid $120 of premiums on the policy. Mary's father gives her $10,000 so that she can purchase a car. Martha gives her attorney an extra $500 because he did an excellent job preparing her will. Henri's aunt died and left him $40,000 in cash and a car worth $22,000. v Payment received for emotional distress due to an automobile accident. Workers' compensation benefits received. Payment of $4,000 by the employer for the employee's health insurance coverage. V Meals received by a nurse at the hospital so she can be on call. Lodging received by a maintenance manager who is not required to live at the apartment complex. An employee is allowed to use the employer's copy machine to make some personal copies.

Please help ASAP!

Answer 1

Answer:

1.(A) excluded   Min received $20000 as tuition scholarship to attend the state university is to be excluded from gross income.

According to the internal revenue code (section 117) allows qualified scholarship to be excluded from the taxable income. Scholarship is not included in gross income. Scholarship received for tuition is not an income.

2. (B) included Sam has to include $65000 in his gross income, since prizes and awards are taxable.He can exclude it by transferring to a qualified charitable organisation or non profit organisation as defined in IRC 170 (c) 1 or IRC 170(c) 2

3. (B) included Caitlyn has to include $ 3000 in gross income. Since unemployment is always taxable. According to IRS, unemployment benefits are taxable income which means any unemployment compensation received from state or federal government is to be included in income and will be taxed at ordinary income tax rate.

4. (A) excluded Nora has covered only a $30000 group life insurance policy from her employer. As a benefit employers are allowed to provide employees with $50000 tax free group term life insurance coverage. Hence exemption is permitted for the premiums paid by the employer also.According to IRS section 70 only the amount above $ 50000 group term insurance coverage will be taxable or to be included in employees income.

5. (A) excluded. Mary received cash $1000 from father to purchase a car, which is not taxable. Any amount received by relatives is not taxable at all. since it is a gift Mary will not have to pay tax for the amount received.

6. (B) included Martha gives extra amount for the attorney for excellent job performance which is considered as taxable wages,. Income derrived from practice is taken under the head income from profession.

7. (A) excluded. it is treated as inheritance tax ,As per income tax 1961, inheritance will not be subjected to tax. its henris appreciation given by his aunty and appreciation cannot be taxable. Hence Henri dont have to pay tax.

8. (B) included . Emotional distress is not a physical injury or physical sickness , hence it is to be included in taxable income. however if emotional distress leads to physical injury or physical sickness then it will be excluded from taxable income under section 104(a)2

9.(A) excluded. Workers compensation are non-taxable benefits paid to workers injured or disbled on the job.hence they are not taxable.

10. (A) excluded. Health insurance paid by the employer is generally excluded from employees grossincome.

11. (A) excluded meals provided to nurse is not included since it forms a composite supply of health care.

12. (A) excluded. Lodging in this case is excluded from tax since it is for the convenience of the employer.

13. (B) included.They are taxed in the hands of the employees accordiung to section 17(2) of the income tax act. it is not taxed by the employer.