Individual Taxation 305Assignment 21.Bob was allowed to exclude from the gross income only $120,000-$50,000=$70,000gain. This exclusion is allowed due to his terminal illness. He was supposed to use findsonly as medical care. He was not using them in a right way.2.Only the collections on the employer-sponsored income protection policy are taxable.The hospitalization benefits are excluded. Also both the premiums and the payments canbe excluded under the rationale that the payments are a recovery of Ben’s premiums.