The separation pay received by John is considered as:
Chapter5: Gross Income: Exclusions
Section: Chapter Questions
Problem 44P
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Question
Due to COVID-19, Angel Corp. incurred huge losses. In order to continue its business operation, the company decided to reduce its employees by creating a redundancy program in accordance with the labor laws. It offered each employees triple the amount of their separation pay. Michael, one of the employees of Angel Corp accepted the offer of the company. After several months, the company is still experiencing huge losses, thus it filed a bankruptcy. John, one of the employees of Angel Corporation, was terminated by the company as a result of its bankruptcy. He received his separation pay in accordance with the labor laws.
The separation pay received by John is considered as:
Group of answer choices
b. Exclusions from Gross Income
e. None of the Above
a. Inclusions in / Items of Gross Income
c. Capital gains subject to capital gains tax
d. Passive income subject to final tax
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