Read each question or scenario thoroughly and construct your answer using information from your lessons, the textbook, or online research. Type your answers and submit in the online course.

1. Brad purchased land for $45,000 this year. At year-end Brad sold the land for $51,700 and paid a sales commission of $450. What effect does this transaction have on Brad's gross income? Explain.

2. Clem and Ida had been married for several years, but in November 2018 they finalized their divorce. In the divorce decree, Clem agreed to deed his car to Ida and pay Ida $10,000 per year for four years (but not beyond her death). Will either of these transfers qualify as alimony for tax purposes? Explain.

3. Rory and Nicholi, single taxpayers, each annually receive Social Security benefits of $15,000. Rory's taxable income from sources other than Social Security exceeds $200,000. In contrast, the Social Security benefits are Nicholi's only source of income. What percentage of the Social Security benefits must Rory include in his gross income? What percentage of Social Security benefits is Nicholi required to include in his gross income?

4. Cassie works in an office and has access to several professional color printers. Her employer allows Cassie and her fellow employees to use the printers to print color postcards for the holidays. This year Cassie printed out two dozen postcards worth almost $76. Must Cassie include this amount in her gross income this year? Explain your answer.

5. Jim was injured in an accident and his surgeon botched the medical procedure. Jim recovered $5,000 from the doctors for pain and suffering and $2,000 for emotional distress related to the injury. Determine the taxability of these payments and briefly explain to Jim the apparent rationale for including or excluding these payments from gross income.