[The following information applies to the questions displayed below.] Consider the following letter and answer Shadys question.

To my friendly student tax preparer:

Hello, my name is Shady Slim. I understand you are going to help me figure out my gross income for the yearwhatever that means. Its been a busy year and Im a busy man, so let me give you the lowdown on my life and you can do your thing.

I was unemployed at the beginning of the year and got $2,000 in unemployment compensation. I later got a job as a manager for Roca Cola. I earned $55,000 in base salary this year. My boss gave me a $5,000 Christmas bonus check on December 22. I decided to hold on to that check and not cash it until next year, so I wont have to pay taxes on it this year. Pretty smart, huh? My jobs pretty cool. I get a lot of fringe benefits like a membership to the gym that costs $400 a year and all the Roca Cola I can drink, although I cant really drink a whole lot.

As part of my manager duties, I get to decide on certain things like contracts for the company. My good buddy, Eddie, runs a bottling company. I made sure that he won the bottling contract for Roca Cola for this year (even though his contract wasnt quite the best). Eddie bought me a Corvette this year for being such a good friend. The Corvette cost $50,000 and he bought it for me out of the goodness of his own heart. What a great guy!

Heres a bit of good luck for the year. Upon leaving my office one day, I found $8,000 lying in the street! Well, one persons bad luck is my good luck, right?

I like to gamble a lot. I won a $22,000 poker tournament in Las Vegas this year. I also won about $5,000 over the year playing the guys at our Friday night poker game. Can you believe that I didnt lose anything this year?

Speaking of the guys, one of them hit me with his car as we were leaving the game one night. He must have been pretty ticked that he lost! I broke my right leg and my left arm. I sued the guy and got $11,000 for my medical expenses, $3,000 to pay my psychotherapist for the emotional problems I had relating to the injuries (I got really depressed!), and I won $12,000 in punitive damages. Thatll teach him that hes not so tough without his car!

Another bit of bad luck. My uncle Monty died this year. I really liked the guy, but the $200,000 inheritance I received from him made me feel a little better about the loss. I did the smart thing with the money and invested it in stocks and bonds and socked a little into my savings account. As a result, I received $600 in dividends from the stock, $200 in interest from the municipal bonds, and $300 in interest from my savings account.

My ex-wife, Alice, is still paying me alimony. Shes a lawyer who divorced me a few years ago because I was unethical or something like that. Since she was making so much money and I was unemployed at the time, the judge ruled that she had to pay ME alimony. Isnt that something? She sent me $3,000 in alimony payments this year. She still kind of likes me, though. She sent me a check for $500 as a Christmas gift this year.

I have filled this out, and it is correct

Included in Gross Income	Amount
Unemployment compensation	$2,000
Salary	55,000
Christmas bonus-check	5,000
Gym membership	400
Corvette	50,000
Found money	8,000
Gambling winnings	27,000
Punitive damages from lawsuit	12,000
Dividends	600
Savings account interest	300
Alimony	3,000
Total gross income	$163,300

I have to fill a practice 1040, and I am having a hard time differentiating what is defined as wages, tips and salaries ... and what is "other income" (no. 21 on 1040)?

I know unemployment compensation, alimony, dividends and interest have their own sections..but what about the others? Help!

Thanks!