Question
I need some help and clarification on this assignment. Mya Lucky Day was unable to work in 2018 (thanks to a workplace injury sustained last
I need some help and clarification on this assignment.
Mya Lucky Day was unable to work in 2018 (thanks to a workplace injury sustained last year); nonetheless, she still amassed a material amount of gross income in 2018 from various sources. Mya has asked for your assistance in determining how much of the $511,830 gross income she realized in 2018 must also be recognized as taxable income on her 2018 individual income tax return. She also needs help with the proper presentation of the recognized income amounts on her Form 1040 and Schedule 1.
Sources of Income | Amount Realized | Amount Recognized | Source Document | Additional Details |
BINGO grand prize winner | 1,700 | 1680 | Form W-2G | Paid $20 for BINGO card |
Annual neighborhood poker tournament | 2,500 | 2350 | None | Paid $150 for buy-in |
Alimony received | 36,250 | 36250 | Divorce decree | Ties to legally binding 2017 divorce settlement agreement |
Child support received | 48,000 | 48000 | Divorce decree | Ties to legally binding 2017 divorce settlement agreement |
Disability insurance proceeds | 22,200 | 16650 | Form 1099-R | Mya paid 25% of the monthly disability insurance premiums using after-tax dollars; Myas employer covered the remaining 75% |
Proceeds from homemade candle sales | 480 | 480 | None | Paid $525 for candle-making supplies (candle-making is a hobby for Mya) |
Workers compensation | 17,500 | 17500 | Employment agreement | Amounts were received from a state-sponsored workers compensation plan |
Lawsuit proceeds lost wages | 41,200 |
| Legal settlement | Lawsuit was related to a physical injury |
Lawsuit proceeds emotional distress | 15,000 |
| Legal settlement | Lawsuit was related to a physical injury |
Lawsuit proceeds punitive damages | 75,000 |
| Legal settlement | Lawsuit was related to a physical injury |
Birthday card money | 2,000 |
| None | Birthday cash from Great-Aunt Tilda to Mya, her favorite niece |
Life insurance proceeds | 250,000 |
| Insurance policy | Proceeds received when poor Great-Aunt Tilda passed away later in the year (Mya was her beneficiary) |
TOTAL INCOME | $511,830 | $132410 |
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379420 374910
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