Injured on the job, you received workers’ compensation benefits of $400,000 to cover your medical expenses, but also another $100,000 for “lost wages.” Obviously you would have been taxable on that $100,000 had you not been in-jured and therefore had actually been able to work for those “wages.” So, as a “substitute for taxable income” (so to speak), the $100,000 has to be included in your gross income while the $400,000 doesn’t, right? Wrong? Why?
Injured on the job, you received workers’ compensation benefits of $400,000 to cover your medical expenses, but also another $100,000 for “lost wages.” Obviously you would have been taxable on that $100,000 had you not been in-jured and therefore had actually been able to work for those “wages.” So, as a “substitute for taxable income” (so to speak), the $100,000 has to be included in your gross income while the $400,000 doesn’t, right? Wrong? Why?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Injured on the job, you received workers’ compensation benefits of $400,000 to cover your medical expenses, but also another $100,000 for “lost wages.”
Obviously you would have been taxable on that $100,000 had you not been in-jured and therefore had actually been able to work for those “wages.” So, as a “substitute for taxable income” (so to speak), the $100,000 has to be included in your gross income while the $400,000 doesn’t, right? Wrong? Why?
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