Answered: The following are exclusions from gross…

The following are exclusions from gross income, except Proceeds of life insurance policies. Retirement benefits. Prizes and winnings. Gifts, bequests and devises.

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter2: Gross Income And Exclusions

Section: Chapter Questions

Problem 3MCQ

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The following are exclusions from gross income, except

Proceeds of life insurance policies.
Retirement benefits.
Prizes and winnings.
Gifts, bequests and devises.

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Define each of the given and describe the different EXCLUSIONS FROM GROSS INCOME: Proceeds of life insurance policy Amount received by the insured as a return of premium Gift, bequest, or descent Compensation for injuries or sickness Income exempt under treaty Retirement benefits, pensions, gratuities, etc.
What are some common examples of income, and what are some common examples of items excluded from income? For example, included items would be income such as alimony received from pre-2019 divorces, gambling winnings, wages, unemployment compensation, etc. and excluded items would be income such as life insurance proceeds, child support payments, medical reimbursements to cover medical expenses, municipal bond interest income, scholarships for tuition and books, inheritances, and gifts, group term life insurance premiums paid by an employer for a policy under $50,000, employee discounts, certain public transportation costs paid for by an employer, veterans’ benefits, etc.
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If insurance proceeds are paid out to the beneficiaries, and the IRS later becomes aware that the benefits were subject to the estate tax: Select one: a. the IRS can follow (and attempt to collect) the life insurance proceeds as far as it can trace them b. the IRS may only collect the amount owed from the executor of the estate. c. the IRS may only collect the amount owed from the executor of the estate and any beneficiaries who received payment. d. the insurer may be liable for the tax owed.
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If an individual renders services for a creditor who in consideration thereof cancels his existing debt, the cancellation of indebtedness may amount to a Gift Donation intervivos Payment of income Capital contribution