Determine the taxpayers current year (1) economic income and (2) gross income fo

Question

Determine the taxpayers current year (1) economic income and (2) gross income for tax purposes for the following events:
a. sue, a coach, was paid $950,000 to terminate her coaching contract
b. Elliot, a six year old child, was paid $10,000 for appearing in a tv commercial
c. Valery's land increased in value by $100,000, when he was successful in having the zoning changed from residential to commercial.
d. Winn purchased a lottery ticket for $5 and won $900,00
e. Larry spent $600 to raise vegtables that he and his family consumed. The cost of the vegtables in a store would have been $2,400.

Explanation / Answer

economic income - the amount a person is allowed to spend in a period of time gross income - how much income before taxes economic income = a gross income = b ////////////////////////////////////////////////////// a. sue, a coach, was paid $950,000 to terminate her coaching contract a.$950,000 b.$950,000 b. Elliot, a six year old child, was paid $10,000 for appearing in a tv commercial a.$10,000 b.$10,000 c. Valery's land increased in value by $100,000, when he was successful in having the zoning changed from residential to commercial. a.$100,000 b.$100,000 d. Winn purchased a lottery ticket for $5 and won $900,00 a.$900,000 - $5 = $899,995 b.$900,000 + $5 = $900,005 e. Larry spent $600 to raise vegetables that he and his family consumed. The cost of the vegetables in a store would have been $2,400. a.$600 b.$600 Market value does not matter. Hope this helped, best of luck.

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