Would the answer be different if Bob also had $1,000 of tax-exempt interest? What if he had had $10,000 of tax-exempt interest? Adjusted Gross Income. Amir, who is single, retired from his job this year. He received a salary of $25,000 for the portion of the year that he worked, tax-exempt interest of $3,000, and dividends from domestic corporations of $2,700. On September 1, he began receiving monthly pension payments of $1,000 and Social Security payments of $600. Assume an exclusion ratio of 40% for the pension. Amir owns a duplex that he rents to others. He received rent of $12,000 and incurred $17,000 of expenses related to the duplex. He continued to actively manage the property after he retired from his job. Compute Amir's adjusted gross income. Court Awards and Insurance Settlements. What amount, if any, must be included in gross income by the following taxpayers? a. Ann received $2,000 from her insurance company when her automobile which cost $3,000 was stolen b. Barry received $3,000 from his brother. Barry had initiated a lawsuit against his brother in an effort to recover $3,000 he had previously loaned to him. The brother paid Barry back before the case was tried, and Barry dropped the lawsuit. c. Carry, an accountant, sued a client in order to collect her fee for doing tax work. Would Carry's accounting method make any difference? d. Dave has incurred $6,000 of medical expenses so far this year. He paid $400 of the expenses himself. His insurance company paid $4,000 of the expenses. The hospital is suing Dave and the insurance company for the balance, $1,600. Claim of Right. USA Corporation hired Jesse to install a computer system for the company and paid him $8,000 for the work. USA soon realized that there were problems with the system and asked Jesse to refund the payment. At the end of the year the dispute had not been resolved. Jesse is in the 25% tax bracket in the year he did the original work. During the next year, when he is in the 15% tax bracket, Jesse refunds the $8,000 to USA. a. Is the original payment taxable to Jesse when he receives it? b. What options are available to Jesse when he repays the $8,000