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Consider the following scenarios: (Click the icon to view the scenarios.) Requirement For each scenario, determine which of the payments for sickness and injury must
Consider the following scenarios: (Click the icon to view the scenarios.) Requirement For each scenario, determine which of the payments for sickness and injury must be included in the taxpayer's gross income. (Enter a "0" for any amounts that should not be included in the taxpayer's gross income.) a. Adam was injured in an automobile accident. The other driver's insurance company paid him $3,000 to cover medical expenses and a compensatory amount of $4,600 for pain and suffering. The amount received to cover medical expenses that must be included as gross income is The amount paid to him for pain and suffering that must be included in gross income is b. A newspaper article stated that Garret had been convicted of tax evasion. Garret, in fact, had never been accused of tax evasion. He sued and won a compensatory settlement of $5,500 from the newspaper. The amount that is taxable as gross income is c. Hal, 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 $2,200 per month during the time he was unable to work. The amount Hal should include as taxable income for the six months he was unable to work is d. Daniel fell and injured his knee. He was unable to work for four months. His employer-financed disability income policy paid Daniel $2,400 per month during the time he was unable to work. The amount Daniel should include as taxable income for the four months he was unable to work is e. Paxton suffered a stroke. He was unable to work for five months. His employer continued to pay Paxton his salary of $1,500 per month during the time he was unable to work. The amount Paxton should include as taxable income for the five months he was unable to work is
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