1.Grady received $7,200 of Social Security benefits this year. Grady also reported salary and interest income this year. Grady files married joint and reports salary of $75,000 and interest income of $500. What amount of the benefits must Grady include in his gross income?

2. Jimmy has fallen on hard times recently. Last year he borrowed $250,000 and added an additional $50,000 of his own funds to purchase $300,000 of undeveloped real estate. This year the value of the real estate dropped dramatically and Jimmys lender agreed to reduce the loan amount to $230,000. The real estate is worth $200,000 and Jimmy has $44,000 in other assets but no other liabilities. What is the amount Jimmy must include in gross income?

3. Fred currently earns $9,000 per month. Fred has been offered the chance to transfer for three to five years to an overseas affiliate. His employer is willing to pay Fred $9,500 per month if he accepts the assignment. Assume that the maximum foreign earned income exclusion for next year is $105,900. How much U.S. gross income will Fred report if he accepts the assignment abroad on January 1 of next year and works overseas for the entire year?

4. Hal was awarded a $14,000 scholarship to attend State Hotel School. All scholarship students must work 20 hours per week at the school residency during the term. How much is the taxpayer required to include in gross income?

5. Terry was ill for three months and missed work during this period. During his illness Terry received $4,000 in sick pay from a disability insurance policy. Terry has disability insurance provided by his employer as a nontaxable fringe benefit. Terrys employer paid $2,800 in disability premiums for Terry this year. What amount is included in Terrys gross income?