Required information The following information applies to the questions displaye

Question

Required information The following information applies to the questions displayed below.] For the following independent cases, determine whether economic income is present and, if so, whether it must be included in gross income (i.e., is it realized and recognized for tax purposes?). (Leave no answers blank. Enter zero if applicable.) a. Asia owns stock that is listed on the New York Stock Exchange, and this year the stock increased in value by $17,500 Economic Income Amount included in Gross Income

Explanation / Answer

a. There is an Economic income of $17500 (Because there is increase in value)

Amount included in Gross Income = $0 (Because stock is not yet sold and income is not realized and recognized)

b. There is an Economic income of $7395 (Sales Price - Commission - Cost)

Amount included in Gross Income = $7395 (Because stock is sold and income is realized and recognized)

c. There is an Economic income of $4545 (Rental Income + Municipal Interest)

Amount included in Gross Income = $3525 (Municipal interest is expected income thus not included in gross income)

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