Chapter 5 Homework Solutions

# Chapter 5 Homework Solutions - Gift Income 19 Leon does not...

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Gift Income 19. Leon does not include the value of the cottage, since it was a gift. The \$20,000 Income from the cottage does belong to Leon and is taxable to him. (The expenses would reduce total income to taxable income) Unemployment Compensation and Disability Income 20. The amount of Read's family income includible in gross income is \$27,000, computed as follows: Unemployment compensation . . . . . . . . . . . . . . . . . . . . . . \$ 5,000 Salary—Robert . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 Salary—Wife . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,000 Supplemental unemployment compensation. . . . . . . . . . . . . 3,000 \$27,000 All unemployment compensation is includible in gross income. Disability income is excluded from gross income if the injury was job-related. Workers' Compensation 21. All the mentioned insurance proceeds are excludable from Windsor's gross income. If medical expenses were deducted on his 2007 tax return, then at the time he received the reimbursement in 2008, he would have to recognize income to the extent of benefits received in 2008. Annuity: Exclusion Ratio 30. Mary Jones must include \$138.37 in her gross income. Annual annuity payment (\$125

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Chapter 5 Homework Solutions - Gift Income 19 Leon does not...

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