Question
1.When Steve died, his wife Linda was the sole beneficiary of his $50,000 life insurance policy. How will the $50,000 life insurance proceeds affect Lindas
1.When Steve died, his wife Linda was the sole beneficiary of his $50,000 life insurance policy. How will the $50,000 life insurance proceeds affect Lindas gross income?
2.For tax purposes in 2018, A&P had operating income of $375,000 and operating expenses of $128,000. Included in A&Ps expenses is $22,000 for bad debts write-offs during 2018. In January of 2019, they received $7,000 from an account that was written off as a bad debt in 2018. What effect does this collection have on A&Ps 2019 taxable income? Can you tell whether A&P is a cash-basis or accrual basis taxpayer, and explain why?
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