1Instructor’s ManualChapter 5Gross Income—ExclusionsLife Insurance Proceeds2.$5,000. Proceeds less investment in contract. Receipt of life insurance is in essence therecovery of a capital asset.4.Prior to 1994, the amount of Social Security benefits included in income was the lesserof one-half of the benefits or one-half of the excess of taxpayer's income over base($25,000 single, $32,000 joint return, zero for married filing separately). For 1994 andlater years, taxpayers with provisional income exceeding thresholds ($34,000, singletaxpayers; $44,000, joint taxpayers) will include the lesser of:b.The total of the following:(2)The smaller of (a) the amount of Social Security benefits included under6.One justification is to stimulate economic development. Another reason is theconstruction of major projects. For a more extensive list, refer back to ¶5075.8.Net cost of annuity×Payment received under annuity=Excludable Portion10.Employer contributions are excluded from employees' gross income.12.Under a joint and survivor annuity, two individuals who are alive receive periodicbenefits for life. In calculating benefits, both spouses must be taken into consideration.Chapter 5
2CCH Federal Taxation— Basic PrinciplesWhen one spouse dies, the surviving spouse receives payments until his or her death, atwhich time all payments cease.Educational Assistance Plans16.$2,000. Grants or awards for items other than tuition, books, and fees must be includedin gross income.Group-Term Life Insurance18.Yes. Premiums for group-term life insurance coverage over $50,000 per year must beincluded in income regardless of income level, as long as the plan is not discriminatory.The amount to be included in income is determined by the uniform premium schedulecovered under Reg. §1.79-3(d)(2).