Chapter 5
1.
Problem 5-55 (LO 5-2)
For each of the following
independent situations, indicate the amount the taxpayer must include in
gross income:
a.
Phil won $790 in the scratch-off
state lottery. There is no state income tax.
Amount to be included
$
b.
Ted won a compact car worth
$18,700 in a TV game show. Ted plans to sell the car next year.
Amount to be
included
$
c.
Al Bore won the Nobel Peace Prize
of $585,000 this year. Rather than take the prize, Al designated that the
entire award should go to Weatherhead Charity, a tax-exempt organization.
Amount to be
included
$
d.
Jerry was awarded $5,500 from his
employer, Acme Toons, when he was selected most handsome employee for
Valentines Day this year.
Amount to be
included
$
e.
Ellen won a $1,950 cash prize in a
school essay contest. The school is a tax-exempt entity, and Ellen plans
to use the funds to pay her college education.
Amount to be
included
$
f.
Gene won $760 in the office March
Madness pool.
Amount to be
included
$
Explanation:
a.
All $790 is economic income
realized this year and is, therefore, included in gross income.
b.
The value of the car, $18,700, is
economic income realized this year and is, therefore, included in gross
income.
c.
The entire award is excluded and
therefore tax exempt. The award is excluded because it was for scientific,
literary, or charitable achievement, and the taxpayer immediately transferred
the award to a qualified charity.
d.
All $5,500 is economic income
realized this year and is, therefore, included in gross income.
e.
All $1,950 is economic income
realized this year and is, therefore, included in gross income.
f.
Gene should include $760 in his
gross income.
2.
Problem 5-72 (LO 5-3)
Dontaes employer has offered him
the following employment package.
Salary
$
450,000
Health insurance
15,500
Dental insurance
1,050
Membership to Heflin
Country Club
17,000
Season tickets to
Atlanta Braves games
5,100
Tuition reimbursement
for graduate courses
4,150
Housing allowance (for
a McMansion in his
neighborhood of choice)
37,000
What is Dontaes gross income from
his employment?
Gross income
$
3.
Problem 5-63 (LO 5-3)
For each of the following
situations, indicate how much the taxpayer is required to include in gross
income:
a.
Steve was awarded a $9,200
scholarship to attend State Law School. The scholarship pays Steve’s
tuition and fees.
b.
Hal was awarded a $19,400
scholarship to attend State Hotel School. All scholarship students must work
40 hours per week at the School residency during the term.
c.
Bill was the recipient of an
athletic scholarship that pays his $20,200 tuition to State University and
provides him with a $840 per month stipend to pay for food and housing. The
scholarship requires Bill to participate in athletic competition each term.
a.
How much of scholarship is Steve
required to include in his gross income?
Amount to be included
$
b.
What is the amount of scholarship
Hal should include in his gross income?
Amount to be included
$
c.
How much of scholarship and
stipend (for 12 months) are to be included in Bill’s gross income?
Amount of scholarship to be included
$
Amount of stipend to
be included
$
Chapter 51. Problem 5-55 (LO 5-2)For each of the following
independent situations, indicate the amount the taxpayer must include in
gross income:a.Phil won $790 in the scratch-off
state lottery. There is no state income tax.
Amount to be included$b.Ted won a compact car worth
$18,700 in a TV game show. Ted plans to sell the car next year.
Amount to be
included$
c.Al Bore won the Nobel Peace Prize
of $585,000 this year. Rather than take the prize, Al designated that the
entire award should go to Weatherhead Charity, a tax-exempt organization.
Amount to be
included$
d.Jerry was awarded $5,500 from his
employer, Acme Toons, when he was selected most handsome employee for
Valentines Day this year.
Amount to be
included$
e.Ellen won a $1,950 cash prize in a
school essay contest. The school is a tax-exempt entity, and Ellen plans
to use the funds to pay her college education.
Amount to be
included$ f.Gene won $760 in the office March
Madness pool.
Amount to be
included$Explanation:a.All $790 is economic income
realized this year and is, therefore, included in gross income.
b.The value of the car, $18,700, is
economic income realized this year and is, therefore, included in gross
income.
c.The entire award is excluded and
therefore tax exempt. The award is excluded because it was for scientific,
literary, or charitable achievement, and the taxpayer immediately transferred
the award to a qualified charity.
d.All $5,500 is economic income
realized this year and is, therefore, included in gross income.
e.All $1,950 is economic income
realized this year and is, therefore, included in gross income.
f.Gene should include $760 in his
gross income.2. Problem 5-72 (LO 5-3)Dontaes employer has offered him
the following employment package. Salary$
450,000 Health insurance15,500
Dental insurance1,050
Membership to Heflin
Country Club17,000
Season tickets to
Atlanta Braves games5,100
Tuition reimbursement
for graduate courses4,150
Housing allowance (for
a McMansion in his
neighborhood of choice)37,000
What is Dontaes gross income from
his employment?
Gross income$3. Problem 5-63 (LO 5-3)For each of the following
situations, indicate how much the taxpayer is required to include in gross
income:a.Steve was awarded a $9,200
scholarship to attend State Law School. The scholarship pays Steve’s
tuition and fees. b.Hal was awarded a $19,400
scholarship to attend State Hotel School. All scholarship students must work
40 hours per week at the School residency during the term. c.Bill was the recipient of an
athletic scholarship that pays his $20,200 tuition to State University and
provides him with a $840 per month stipend to pay for food and housing. The
scholarship requires Bill to participate in athletic competition each term. a.How much of scholarship is Steve
required to include in his gross income?
Amount to be included$b.What is the amount of scholarship
Hal should include in his gross income?
Amount to be included$c.How much of scholarship and
stipend (for 12 months) are to be included in Bill’s gross income?
. .
The post For each of the following independent situations, indicate the amount the taxpayer must include in gross income appeared first on Blackboard Masters.