Question
Although Hank is retired, he is an excellent handyman and often works part-time on small projects for neighbors and friends. Last week his neighbor, Mike,
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Although Hank is retired, he is an excellent handyman and often works part-time on small projects for neighbors and friends. Last week his neighbor, Mike, offered to pay Hank $500 for minor repairs to his house. Hank completed the repairs in December of this year. Hank uses the cash method of accounting and is a calendar-year taxpayer. Mike gave Hank tickets in December to the big game in January. The tickets have a face value of $50 but Hank could sell them for $475. Hank went to the game with his son. What is Hanks gross income for this year?
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Louis files as a single taxpayer. In April of this year he received a $900 refund of state income taxes that he paid last year. Last year Louis claimed itemized deductions of $12,700. Louiss itemized deductions included state income taxes paid of $1,750. How much of the refund, if any, must Louis include in gross income? Assume the standard deduction last year was $12,400.
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Anne purchased an annuity from an insurance company that promised to pay her $20,000 per year for the next ten years. Anne paid $135,000 for the annuity, and in exchange she will receive $200,000 over the term of the annuity. How much of the first $20,000 payment should Anne include in gross income?
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Larry purchased an annuity from an insurance company that promises to pay him $1,500 per month for the rest of his life. Larry paid $173,448 for the annuity. Larry is in good health, and he is 72 years old. Larry received the first annuity payment of $1,500 this month. Use the expected number of payments in Exhibit 5-1 for this problem. How much of the first payment should Larry include in gross income?
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Lanny and Shirley are divorced in 2018 and do not live together. Shirley has custody of their child, Art, and Lanny pays Shirley $22,000 per year. All property was divided equally. How much should Shirley include in income if Lannys payments drop to $14,000 once Art reaches the age of 18?
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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?
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