TAX4001 - Answers Chapter 5

TAX4001 - Answers Chapter 5 - Homework Answers - Chapter 5...

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Homework Answers - Chapter 5 29. a. Josh must include the $10,000 in gross income. Because the payment is from his employer, it cannot be treated as a gift. b. Joe is not required to include the worker’s compensation of $12,000 in gross income because these benefits are specifically excluded from gross income. The amount collected of $1,500 on the replacement insurance policy is excluded from gross income because he paid the premiums on the policy. c. The life insurance proceeds of $1 million are excluded from gross income because the recipient (Pearl Corporation) was the beneficiary who collected the insurance proceeds upon death of the insured. d. The life insurance proceeds of $50,000 received by Juan are excluded from gross income, even though the premiums were never included in Leona’s gross income. e. Juan must include his wife’s accrued vacation pay of $5,000 in his gross income because it would have been taxable to Juan’s wife if she had collected it (“income in respect of a decedent”). 33. a. Fay is the beneficiary of the life insurance policy and can exclude the proceeds of $1.75 million from her gross income. b. The $20,000 of interest earned on the life insurance proceeds left with the insurance company is included in Fay’s gross income. c. Fay did not recognize a gain on the bargain purchase. Fay simply got a good price on the purchase under an arm’s length contract. pp. 5-7 to 5-9 35. Alejandro received a total of $11,000 and spent $8,900 ($3,300 + $3,400 + $1,000 + $1,200) on tuition, books, and supplies. The amount received for room and board is not excludible. Therefore, he must include $2,100 ($11,000 – $8,900) in gross income. When
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This note was uploaded on 03/17/2010 for the course TAX 4001 taught by Professor Gonzalez during the Spring '10 term at Florida Memorial.

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TAX4001 - Answers Chapter 5 - Homework Answers - Chapter 5...

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