Part 1: What is the taxpayer’s gross income in each of the following situations?
Darrin received a salary of $50,000 in 2013 from his employer, Green Construction.
In July 2013, Green gave Darrin an all-expense-paid trip to Las Vegas (value of $3,000) for exceeding his sales quota.
Megan received $10,000 from her employer to help her pay medical expenses not covered by insurance.
Blake received $15,000 from his deceased wife’s employer “to help him in his time of greatest need.”
Clint collected $50,000 as the beneficiary of a group term life insurance policy when his wife died. The premiums on the policy were paid by his deceased wife’s employer.
Peggy won $4000 in the state lottery.
Part 2: Determine the effect of the scholarship on gross income of Sally (for question 1) and then determine the effect of the scholarship payments on the gross income of Willy (for question 2).
Sally was an all-state soccer player during her junior and senior years in high school. She accepted an athletic scholarship from State University. The scholarship provided the following:
Tuition and fees $15,000
Housing and meals 6,000
Books and supplies 1,500
Transportation 1,200
Sally’s brother, Willy, was not a gifted athlete, but he received the following:
$8,000 from their father’s employer as a scholarship during the year. The employer grants the children of all executives a scholarship equal to one-half of annual tuition, fees, books, and supplies.
Willy also received a $6,000 scholarship (to be used for tuition) as the winner of an essay contest related to bioengineering, his intended field of study.
Requirements:
Clearly identify the requirements being addressed. Show all calculations within the cells of the provided Excel spreadsheet. This means that you must use formulas and links so that the thought process can be examined. Make good use of comments to convey your thought process as well. No hard coding of solutions. Submit a single MS Excel file for grading.