Items Statutorily Excluded from Gross Income

Question 1

Employer-Provided Benefits

Answer 1

(1) Employer-provided meals and lodging
(2) Fringe benefits
(3) Employer-provided health plan
(4) Employer-provided group term life insurance
(5) Educational assistance program

Question 2

Family and Other Similar Transfers

Answer 2

(1) Property transfer incident to divorce
(2) Gifts
(3) Inheritance, bequest, or devise

Question 3

Personal Injury Recovery

Answer 3

PHYSICAL injury or PHYSICAL manifestation is required in order to qualify for an exclusion from gross income

Emotional distress is insufficient

Question 4

Life Insurance Proceeds

Answer 4

Proceeds paid to policy beneficiary are excluded from beneficiary’s gross income

If life insurance policy sold to someone else, anything received in excess of what that person paid for the policy is TAXABLE

Question 5

Loans

Answer 5

Real loan received by borrower is not gross income

Question 6

Qualified Scholarships

Answer 6

Covered: tuition, books, supplies, and equipment used in classes

NOT COVERED: room, board, travel

Question 7

Gain from Sale of Principal Residence

Answer 7

Excludes $250,000 of gain (or $500,000 for a married couple filing a joint return) from gross income

To be “principal” residence, taxpayer must have occupied residence for at least 2 OUT OF 5 YEARS prior to sale

Can only claim exclusion once every 2 YEARS

Question 8

Contributions to Corporation’s Capital

Answer 8

Money or property paid to capital of corporation is excludible as gross income and not taxable to the corporation