30 Pete competed in the annual El Paso Spelling Bee this year and won a $25,000

Question

30 Pete competed in the annual El Paso Spelling Bee this year and won a $25,000 prize for best spelling champion. Pete was thinking that he might transfer the prize to a won. How much of the prize should Pete include in his gross income? a $25,000 b. $25,000 because prizes are taxable c. Zero because prizes transferred to charities are excludible d. Zero because all prizes are excludible e. Zero because prizes from charities are excludible 31. Juan provided services to several clients this year who paid with different types of property Which of the following payments is not included in Juan's gross income? -b. Plumbing services performed in exchange for Juan's services c. A used car d. Gold coins e. All of these are included in gross income 32. Jett is employed as a site boss for a construction crew. This year he earned a salary of $45,000 and incurred the following expenses associated with his employment: Professional Dues to Contractors State Society Class on Building Sheds Contractor's Monthly (magazine) Mileage expense travelling to and from work sites Tickets to Braves Baseball (He and his dad enjoy baseball games) $400 $200 $50 $500 $300 What amount of miscellaneous itemized deductions can Tom include with his other allowable itemized deductions (after any AGI limitations)? a. $900 b. $300 C. $550 d. $250 e. None of these

Explanation / Answer

30. c. Zero because prizes transferred to charities are excludible. Although prizes are taxable, however, if it is given away as a charitable contribution, it will not be added to the gross income and hence not taxable.

31. b. Plumbing services will not be included in Juan's gross income as it does not fall within the definition of Income. Rest all other means Cash, used car & gold coin being convertible into money fall within the definition of income, hence will form part of Juan's gross income.

32. c. $ 550. Contractor's magazine is directly related to the business, hence will be allowed as deduction from Tom's income. Similarly, business mileage for travelling to and from work sites is also deductible from Tom's income as it is directly related to official duties discharged by Tom.  

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