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Cate was recently diagnosed with lung cancer and has been certified by her doctor, on June 1st of the current year, as terminally ill. On July 1st of the current year, Cate sold her life insurance policy (with a face value of $500,000) for $340,000. Assuming she paid $50,000 in premiums, how much of the $340,000 proceeds must she include in her gross income for the current year?

~$0

~$34,000

~$50,000

~$290,000

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Nick and Kim are married and are trying to calculate their gross income for the current year. Which of the following items should they include in gross income?

1. Child support payments in the amount of $15,000 received from Kims ex-husband for the support of their minor child.
2. $1,200 in cash dividends received.
3. Unemployment benefits received in the amount of $800.
4. $3,000 that Kim earned selling homemade soaps.

~4 only

~1 and 2

~2, 3, and 4

~All of the above

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During this year, Jack was injured on his job. As a result of the injury, he received the following payments during this year:

• Workers compensation received for injuries suffered at work: $2,600
• Damages for physical injuries: $10,000
• Back pay for two missed months of work: $9,000

What is the amount to be included in Jacks gross income for the current year?

~$9,000

~$19,000

~$11,600

~$21,600

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Harold is covered by a $180,000 group term life insurance policy and his daughter is the beneficiary. Harolds employer pays the entire cost of the policy for which the uniform annual premium is $8 per $1,000 of coverage. How much of this premium is taxable to Harold?

~$0

~$640

~$1,040

~$1,440