Question

Cassie is preparing her federal income tax return. Which of the following items should be excluded from Cassie's gross income?

Royalties received by Cassie for her best-selling novel.

$100,000 in cash received by Cassie when her grandmother died.

Alimony received by Cassie from her ex-husband.

$5,000 of gain resulting from the sale of Cassie's favorite painting.

Answer 1

Answer:$100,000 in cash received by Cassie when her grandmother died.

Explanation: In preparing federal income tax return, there are some income that are excepted from tax and they include:

1. Any payment received as an inheritance

2. Cash gift for the purchase of a property

3. Income received as compensation for loss.

4. Income earned outside the taxing jurisdiction.

Answer 2

Answer:

$100,000 in cash received by Cassie when her grandmother died.

Explanation: