Federal Individual Taxation

Part 1: What is the taxpayer’s gross income in each of the following situations?

a.Darrin received a salary of $50,000 in 2013 from his employer, Green


b.In July 2013, Green gave Darrin an all-expense-paid trip to Las Vegas (value of $3,000) for exceeding his sales quota.

c.Megan received $10,000 from her employer to help her pay medical expenses not covered by insurance.

d.Blake received $15,000 from his deceased wife’s employer “to help him in his time of greatest need.”

e. Clint collected $50,000 as the beneficiary of a group term life insurance policy when his wife died. The

premiums on the policy were paid by his deceased wife’s employer.

f. Peggy won $4000 in the state lottery.

Part 2: Sally was an all-state soccer player during her junior and senior years in high school. She accepted an athletic scholarship from State University. The scholarship provided the following:

Tuition and fees$15,000

Housing and meals 6,000

Books and supplies 1,500

Transportation $1,200

a.Determine the effect of the scholarship on Sally’s gross income.

b. Sally’s brother, Willy, was not a gifted athlete, but he received $8,000 from their father’s employer as a scholarship during the year. The employer grants the children of all executives a scholarship equal to one-half of annual tuition, fees, books, and supplies. Willy also received a $6,000 scholarship (to be used for tuition) as the winner of an essay contest related to bioengineering, his intended field of study

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