40. For each of the following, indicate the amount that must be included in the

taxpayers gross income:

a. Larry was given a $1,500 tuition scholarship to attend Eastern Law School. In addition, Eastern paid Larry $4,000 per year to work part-time in the campus bookstore.

b. Marty received a $10,000 football scholarship for attending Northern University. The

scholarship covered tuition, room and board, laundry, and books. Four thousand dol-lars of the scholarship was designated for room and board and laundry. It was under-stood that Marty would participate in the school s intercollegiate football program, but Marty was not required to do so.

c. Western School of Nursing requires all third-year students to work twenty hours per

week at an affiliated hospital. Each student is paid $10 per hour. Nancy, a third-year

student, earned $10,000 during the year.

42. Determine which of the following payments for sickness and injury must be included in the taxpayers gross income.

a. Pat was injured in an automobile accident. The other drivers insurance company paid

him $2,000 to cover medical expenses and a compensatory amount of $4,000 for pain

and suffering.

b. A newspaper article stated that Quincy had been convicted of tax evasion. Quincy, in

fact, had never been accused of tax evasion. He sued and won a compensatory settle-ment of $4,000 from the newspaper.

c. Rob, who pays the cost of a commercial disability income policy, fell and injured his

back. He was unable to work for six months. The insurance company paid him $1,800

per month during the time he was unable to work.

d. Steve fell and injured his knee. He was unable to work for four months. His employer-financed disability income policy paid Steve $1,600 per month during the time he was unable to work.

e. Ted suffered a stroke. He was unable to work for five months. His employer continued

to pay Ted his salary of $1,700 per month during the time he was unable to work.