Exam 20: Gross Income: Exclusions

Michael is an employee of StayHere Hotels,Inc.in Washington,DC.On his vacation,Michael travels to San Francisco and stays at a StayHere Hotel for six nights free of charge.The regular rate for a hotel room at StayHere in San Francisco is $300 a night.His ability to stay in the hotel without charge is based on the availability of empty rooms.How much income must Michael report due to the use of the San Francisco hotel room?

Payments received from a workers' compensation plan funded by employer contributions are taxable.

Amanda,who lost her modeling job,sued her employer for age discrimination.She was awarded $75,000 in lost wages,$25,000 for emotional distress,and $150,000 punitive damages.The amount taxable is

The discharge of certain student loans is excluded from income if all of the following are present except for

Felice is in the hotel management field.She rents an apartment near the hotel so she can walk to work.She pays $1,000 per month for rent.Felice has just been offered a similar position at a different hotel.The salary will be $14,000 lower,but they do require she live in the hotel to be on call and provide her with suite to live in.Felice has a marginal tax rate of 33%.She will be financially ahead by accepting the new position.

Mae Li is beneficiary of a $70,000 insurance policy on her father's life.Upon his death,she elects to receive the proceeds in installments from the insurance company that carries the policy.She will receive $16,000 per year for five years.What are the tax consequences each year?

Amounts withdrawn from qualified tuition plans are tax-free if the amounts are used for qualified higher education expenses including tuition,fees,books,and room and board for students attending on at least a half-time basis.

John,an employee of a manufacturing company,suffered a heart attack and was unable to work for six months.He received $1,500 per month of disability benefits as a result of an employer-provided group policy.The benefits are includible in John's gross income.

Martina,who has been employed by the Smythe Corporation for ten years,receives a $400 watch as a length of service award in a meaningful presentation.The fair value of the watch is taxable.

While payments received because a person has been physically injured are excluded from gross income,payments on account of non-physical injury must be included in gross income.

Employers must report the value of nontaxable meals and lodging provided to employees on the employees' W-2s at year-end.

Julia suffered a severe stroke and has been admitted to a private hospital where she is expected to remain for the rest of her life.She is certified by a licensed health care practitioner as being a "chronically ill individual." Her hospital expenses amount to $350 per day.She will receive $340 per day from a $500,000 life insurance policy as an accelerated death benefit.In 2017,she was in the hospital for 10 days and received $3,400.How much of this amount is taxable?

Chloe receives a student loan from a foundation which encourages students to pursue teaching careers.Under the terms of the loan,Chloe will not have to repay the loan if she teaches in a public school for ten years.What tax issues should Chloe consider?

Nondiscrimination requirements do not apply to working condition fringe benefits.

All payments made by an employer to the family of a deceased employee are excluded from the recipient's gross income regardless of the reason for payment.

Bob,an employee of Modern Corp. ,receives a fringe benefit (in lieu of a salary increase)of $1,000.Bob is in a 33% tax bracket.The fringe benefit is nontaxable to Bob.If he had instead paid for the benefit out of his own money,the cost would not be deductible.Bob's after-tax savings from receiving the tax-free benefit is