Question

*James, a cash basis taxpayer, received the following compensation and fringe benefits in the current year : Salary $66,000 Disability income protection premiums 3,000 Long-term care insurance premiums 4,000 His actual salary was $72,000. He received only $66,000 because his salary was garnished and the employer paid the $6,000 owed on James’s credit card. The wage continuation insurance is available to all employees and pays the employee three-fourths of the regular salary if the employee is sick or disabled. The long-term care insurance is available to all employees and pays $150 per day toward a nursing home or similar facility. What is James’s gross income from the above

Answer 1

James gross income from the above is $ 72000.

The $6,000 paid to the creditor is income to James as it was used to pay his debt. The disability income protection premiums and long-term care insurance premiums are excluded from gross income.