LO.1 Determine the taxpayer’s current-year (1) economic income and (2) gross income for tax purposes from the following events:

a. Sam’s employment contract as chief executive of a large corporation was terminated, and he was paid $500,000 not to work for a competitor of the corporation for five years.

b. Elliot, a six-year-old child, was paid $5,000 for appearing in a television commercial.

His parents put the funds in a savings account for the child’s education.

c. Valery found a suitcase that contained $100,000. She could not determine who the owner was.

d. Winn purchased a lottery ticket for $5 and won $750,000.

e. Larry spent $1,000 to raise vegetables that he and his family consumed. The cost of the vegetables in a store would have been $2,400.

f. Dawn purchased an automobile for $1,500 that was worth $3,500. The seller was in desperate need of cash.