42. advised her to stay home for six months due to her injuries. On February 25, 2010, she files a lawsuit. On July 20, 2010, Rose returned to work. On December 15, 2010, the lawsuit was settled received the following amounts: Compensation for lost wages$25,000Personal injury damages awarded (none of which was for punitive damages)40,000How much of the settlement must Rose include in ordinary income on her 2010 tax return? $0 a. $25,000 b. $40,000 c. $65,000 d. All of the following would be excluded from income as a qualified scholarship by an individual who is a 43. candidate for a degree at a qualified educational institution, except: d. Ron Rake is a candidate for a master’s degree at State University. During 2010, he was granted a 44. fellowship that provided: Tuition$8,000Books and supplies1,500Room2,000Board1,000What is the amount Ron may exclude from gross income for 2010? d. During 2010, under a qualified written plan for educational assistance, Jake Jenner’s employer paid 45. Local University $9,200 on Jake’s behalf: $7,500 for tuition, books, supplies, and lab fees and $1,700 for lodging. What is the amount of assistance that Jake should include in his gross income for 2010 if the payment was before May 1, 2010? d. Sandra Bellows purchased a 15-year annuity for $25,000. Starting at the beginning of the year, Sandra will 46. receive $200 per month. What is the total amount that Sandra can exclude from her gross income from her annuity this year? $2,400a. $2,000b. $1,867c. $1,667d.
450 CCH Federal Taxation—Basic Principles Chapter 5 © 2010 CCH. All Rights Reserved. Linda Smith paid $25,000 in premiums on a 20-year endowment policy on her life. The policy has a face 47. value of $40,000. At age 60, Linda decides to collect the face value of the policy. In the year of collection, how much will Linda include in her taxable income? d. In 2010, Max is 85 years of age and single. He received Social Security payments totaling $14,000 (this 48. includes Medicare premium of $600), dividend and interest income of $21,000, a pension of $30,000 and a taxable IRA benefits of $16,000. What is Max’s adjusted gross income for 2010? d. Mr. and Mrs. Clark are both 72 years of age, married, filing jointly. They received social security benefits 49. of $7,500 each. Additional income is a taxable pension of $12,000 for Mr. Clark and $6,000 for Mrs. Clark. What is the taxable portion of the social security benefits received by the Clarks?
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