Chapter 5 Gross Income and Exclusions Example 1. Gram purchased 100 shares of ABC stock for $20/share last year. The ABC stock was worth $45/share on 12/31 this year and Gram has not sold the stock. How much income has Gram realized and how much does Gram need to recognize on her tax return? Example 2. Gram exchanged babysitting services to her landlord's son and paid no rent (typical rent is $450/month in a similar unit). What income must Gram and her landlord realize and recognize on this exchange? What if Gram does nothing for the landlord or landlord's son and lives rent-free? Example 3. Taxpayer paid a $2,000 business expense and claimed a for AGI deduction in 2018, but $250 of the expense was subsequently reimbursed in 2019. How should this refund be treated? Example 4a. In 2018, Taxpayer paid $5,500 for Idaho state income taxes and included this amount as part of the itemized deductions on her federal tax return filed in 2018 as a head of household. Her total 2018 itemized deductions is $18,600. She filed her 2018 state tax return and discovered she only owed $5,100 in her state income tax for 2018 and received $400 refund of her state income tax for 2018 in 2019. How much of the $400 return, if any is Taxpayer required to include in her gross income for 2019? Example 4b. what if, same facts as 4a, except in 2018 Taxpayer's itemized deductions including $3,500 in state income taxes, were $$17,500. How much of the $400 return, if any, is Taxpayer required to include in her gross income for 2017? Example 4c. what if, same facts as 4a, except in 2018 Taxpayer's itemized deductions, including $3,500 in state income taxes, were $18,200. How much of the $400 return, if any is Taxpayer required to include in her gross income for 2017? Example 5. A cash-basis Taxpayer's supervisor told her on 12/31/18 that her bonus check of $3,600 was issued and available at any time. Taxpayer did not pick up the check until 1/2/19. When and how much does Taxpayer realize and recognize the bonus? Example 6. Mother directs her employers to deposit half of her salary to her Son's bank account. Who reports and pays tax on this deposit? Example 7. Mother has a rental property that generates $7,200 annual rental income. What can she do to ensure that Son realizes all rental income on his tax return? Example 8a. Husband and Wife lived in a common law state when their divorce wa finalized this year. Husband earned $8,000 and Wife earned $160,000. How much do Husband and Wife report their income on his/her individual tax return? Example 8b. same facts as 8a except they lived in a community property state, how much do Husband and Wife report their income on his/her individual tax return