In: Accounting
Which of the following items are exclusions from gross income?
(Please include the code section if applicable)
a. Included in
b. Excluded from
c, Included in
d. Excluded from
e. Excluded from
Explanations:
(a) In this case, the receiver of the alimony payment will not pay taxes on the income and payments are included in gross income tax according to court order, hence it is taxable income and is included in gross income.
(b) The damages for personal physical property are excluded only if there is punitive damages, however, in the case, the damages received was not punitive damages. Therefore, this is excluded form gross income.
(c) In this case, prizes won are included in income tax and thus, it is not an exclusion.
(d) The income earned through loan is included, however in this case, the income earn from loan from a friend will be excluded from gross income, and therefore it is an exclusion.
(e) Death benefits are included in the gross income, but not insurance, hence it is an exclusion from gross income.