In 2014 Jack suffered bodily injury while at work. In 2016, Jack won a workers' compensation claim and prevailed in an injury lawsuit, both in connection with the 2014 injury. Jack received the following in 2016 as settlement: Punitive damages $150,000 Workers' compensation $50,000 Personal physical injury damages $25,000 Compensation for emotional distress caused by the physical injury $15,000 What amount of the settlement should be excluded from Jack's 2016 gross income? $25,000 $165,000 $90,000 $75,000

In 2014 Jack suffered bodily injury while at work. In 2016, Jack won a workers' compensation claim and prevailed in an injury lawsuit, both in connection with the 2014 injury. Jack received the following in 2016 as settlement: Punitive damages $150,000 Workers' compensation $50,000 Personal physical injury damages $25,000 Compensation for emotional distress caused by the physical injury $15,000 What amount of the settlement should be excluded from Jack's 2016 gross income? $25,000 $165,000 $90,000 $75,000

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter7: Deductions And Losses: Certain Business Expenses And Losses

Section: Chapter Questions

Problem 24CE

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On May 1, 2020, Anthony was in an automobile accident while on his way to work. Following doctor’s advice, Anthony stayed home for six months to recover from his injuries. While at home, Anthony filed a lawsuit against the other driver. On December 1, 2020, the lawsuit was settled and Anthony received the following amounts: Compensation for lost wages $30,000 Personal injury damages (none of which was for punitive damages) 50,000 How much of the settlement must Anthony include in ordinary income on his 2020 tax return?
Christie sued her former employer for a back injury she suffered on the job in 2021. As a result of the injury, she was partially disabled. In 2022, she received $240,000 for her loss of future income, $160,000 in punitive damages because of the employer's flagrant disregard for the employee's safety, and $15,000 for the reimbursement of medical expenses. What's Christie's gross income in 2021? Please explain.
In 2014, Peter received a $5,000 bonus computed based on a percentage of profits. In 2015, Peter's employer determined that 2014 profits have been incorrectly computed, and Peter has to refund the $5,000. Under the Claim of Right Doctrine, how is this event treated in 2014 and 2015?
Noelle's diamond ring was stolen in 2017. She originally paid $15,400 for the ring, but it was worth considerably more at the time of the theft. Noelle filed an insurance claim for the stolen ring, but the claim was denied. Because the insurance claim was denied, Noelle took a casualty loss deduction for the stolen ring on her 2017 tax return. In 2017, Noelle had AGI of $77,000. After Noelle threatened legal action in early 2019, the insurance company had a "change of heart" and sent Noelle a check for $9,240 for the stolen ring. The per-event floor is $100. What is the proper tax treatment of the $9,240 Noelle received from the insurance company in 2019? Noelle should _______the amount of______.
Christie sued her former employer for a back injury she suffered on the job in 2020. As a result of the injury, she was partially disabled. In 2021, she received $240,000 for her loss of future income, $160,000 in punitive damages because of the employer’s flagrant disregard for the employee’s safety, and $15,000 for medical expenses. The medical expenses were deducted on her 2020 return, reducing her taxable income by $12,000. Christie’s 2021 gross income from the above is: a.) $412,000 b.) $172,000 c.) $415,000 d.) $255,000
Elsie had an AGI of $105,000 in 2018. All of her income was from wages. Elsie owned a rental house and actively participated in the management of the rental house. The rental house generated losses of $25,000 in 2018. Elsie has over $100,000 at risk. What amount of the $25,000 loss can Elsie deduct in 2018?
Peter moved from Manitoba to Nova Scotia in 2020, as a result of a promotion by his employer to open a new branch. When he sold his house in Manitoba he incurred a loss of $100,000 on the sale. Peter's employer decided to reimburse him for the housing loss of $100,000 in 2020. Which of the following amounts represent the increase to Peter's employment income in 2020 as a result of this reimbursement? (Show Calculations) (a) No change to employment income (b) $42,500 added to employment income (c) $15,000 added to employment income (d) $100,000 added to employment income
Holly was injured while working in a factory and received 12,000 as workers compensation while she was unable to work because of the injury. Jill, who was self-employed, was also injured and unable to work. Jill collected 12,000 on an insurance policy she had purchased to replace her loss of income while she was unable to work. How much are Holly and Jill each required to include in their gross income?
Kim was seriously injured at her job. As a result of her injury, she received the following payments: 5,000 reimbursement from employer-provided health insurance for medical expenses paid by Kim. The premiums this year paid by Kims employer totaled 6,000. 15,000 disability pay. Kim has disability insurance provided by her employer as a nontaxable fringe benefit. Kims employer paid 6,000 in disability premiums this year on behalf of Kim. 10,000 received for damages for personal physical injury. 200,000 for punitive damages. What amount is taxable to Kim? a. 215,000 b. 225,000 c. 236,000 d. 0
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