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Determine if the following are included or excluded from gross income: Mary’s father gives her $10,000...

Determine if the following are included or excluded from gross income:

  1. Mary’s father gives her $10,000 so that she can purchase a car.
  2. The Lang family receives $3,000 from a friend after their house was destroyed by fire.
  3. Martha gives her attorney an extra $500 because he did an excellent job preparing her will.
  4. Justin’s employer gave him an iPad because he has not been absent from work for three weeks.
  5. Juan’s wife died three weeks ago, and her employer gave Juan’s children $2,000.
  6. Henri’s aunt died and left him $40,000 in cash and a car worth $22,000.

Solutions

Expert Solution

What is included in gross income - salary or employment income, dividend or interest received, alimony, pension, capital gains, and rental income.
What is not included in gross income - social security benefits, life insurance payouts, some inheritances or gifts, state or municipal bond interest.
a) Mary's father gave her 10000 so that she can purchase a car
This will come under the "gifts" source of income and will not be included
in gross income.
b) The Lang family receives $3,000 from a friend after their house was destroyed by fire.
This will come under the "gifts" source of income and will not be included
in gross income.
c) Martha gives her attorney an extra $500 because he did an excellent job preparing her will.
This is the attorney's salary income and will be included in the attorney's gross income
d) Justin’s employer gave him an iPad because he has not been absent from work for three weeks.
This is not part of the salary income and is a gift from the employer.
This gift will not be included in gross income.
e) Juan’s wife died three weeks ago, and her employer gave Juan’s children $2,000.
This is not part of the salary income and is a gift from the employer.
This gift will not be included in gross income.

f) Henri’s aunt died and left him $40,000 in cash and a car worth $22,000.
This will come under the "inheritances" source of income and will not be included
in gross income.

jeff jeffy answered 1 year ago
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