Question

In: Accounting

Lisa and Collin are married. Lisa works as an engineer and earns a salary of $116,000....

Lisa and Collin are married. Lisa works as an engineer and earns a salary of $116,000. Collin works at a beauty salon and reported wages of $45,000. Lisa received $500 of interest from corporate bonds and $250 of interest from a municipal bond. Lisa acquired these bonds prior to her marriage to Collin. Collin's father passed away on April 14. He inherited cash of $50,000 and his baseball card collection, valued at $2,000. As beneficiary of his father's life insurance policy, Collin also received $150,000. The couple spent a weekend in Atlantic City in November and came home with gambling winnings of $1,200. Collin was injured in an accident at the salon. He was unable to work for a month, but during this time he received $5,000 from disability insurance he purchased several years ago. Collin also received $2,000 in worker's compensation, and $1,500 damages for the emotional trauma he suffered from the accident. They will file married filing jointly.

How much must they include in gross income for each of the following items:

a: Amount of salary and wages included in gross income

b: Amount of interest income included in gross income

c: Amount of inheritance and life insurance included in gross income

d: Amount of gambling winnings included in gross income

e: Amount of disability insurance, worker's compensation, and damages from the accident included in gross income

Solutions

Expert Solution

Part A

Amount of salary and wages included in gross income=116000+45000=161000

Part B

Amount of interest income included in gross income = $500

Part C

Amount of inheritance and life insurance included in gross income = 0

Part D

Amount of gambling winnings included in gross income =1200

Part E

Amount of disability insurance, worker's compensation, and damages from the accident included in gross income= 0

Municipal interest, inheritance and life insurance, disability pay, workman's compensation and damages are not included in the gross income.

ekkarill92 answered 2 years ago
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