Taxable or Nontaxable Income

Question 1

FMV of property or services received in barter. If so, what form?

Answer 1

Taxable (T); report on Sch. C

Question 2

Informal exchange of similar services on a noncommercial basis

Answer 2

Nontaxable (NT)

Question 3

Cancellation of debt owed by taxpayer

Answer 3

T (If debt was for a business or rental, it is reported as business or rental income),

Question 4

Cancellation of debt that would have been deducted if paid.

Answer 4

NT

Question 5

Student loan debt canceled after performance of work.

Answer 5

NT

Question 6

Debt canceled in a Title 11 bankruptcy case (to extent of insolvency).

Answer 6

NT

Question 7

Qualified farm or real property debt cancelled

Answer 7

NT

Question 8

Debt cancellation intended as gift.

Answer 8

NT

Question 9

Severance pay

Answer 9

T

Question 10

Expense reimbursement under a nonaccountable plan

Answer 10

T

Question 11

Payment of employee’s share of Soc. Sec./Medicare taxes.

Answer 11

T

Question 12

Holiday gifts

Answer 12

T

Question 13

Fringe benefits

Answer 13

T

Question 14

Expense reimbursement under a nonaccountable plan

Answer 14

NT

Question 15

Reimbursed and employer-paid deductible moving expenses.

Answer 15

NT

Question 16

Cost of group-term life insurance coverage, including coverage paid to retiree

Answer 16

NT up to $50,000

Question 17

Employee length of service awards

Answer 17

NT up to $1,600

Question 18

Employer-provided health coverage

Answer 18

NT

Question 19

Value of employer-provided meals, lodging, athletic facilities, services normally offered to customers

Answer 19

NT

Question 20

Are travel expenses deductible for gamblers?

Answer 20

If professional, yes.

Question 21

Are gambling losses deductible?

Answer 21

On Sch. A, to the extent of gambling income.

Question 22

Are scholarships given as prizes taxable?

Answer 22

If recipient is not required to use funds for education, yes.

Question 23

When is a prize/award nontaxable?

Answer 23

NT if:
Given for outstanding achievement
Winner selected w/no action on his/her part
Winner not required to perform services
Winner assigns prize to govt. unit or tax-exempt charity
Winner refuses to accept prize.

Question 24

Income in respect of a decedent- items that would have been included in income if received before death

Answer 24

T

Question 25

Property received from decedent

Answer 25

NT

Question 26

Damages paid on account of personal injuries not physical

Answer 26

T

Question 27

Insurance reimbursement of medical expenses deducted in an earlier year

Answer 27

T, to the extent of tax benefit received

Question 28

Punitive damages

Answer 28

T, unless wrongful death claim

Question 29

Damages received on account of physical injury/sickness, including emotional distress

Answer 29

NT

Question 30

Property damage

Answer 30

NT, to extent of basis in property

Question 31

Consumer claims

Answer 31

NT, if not deducted

Question 32

Damages in cases of nonphysical injury

Answer 32

NT, to extent of medical expenses for treatment of emotional distress

Question 33

Interest on proceeds held by insurer after the insured's death

Answer 33

T

Question 34

Proceeds paid b/c of insured's death

Answer 34

NT

Question 35

Proceeds from policy transferred before insured's death

Answer 35

T

Question 36

Proceeds from surrender of life insurance policy in excess of investment in contract

Answer 36

T

Question 37

Accelerated death benefits paid to someone w/business relationship w/insured

Answer 37

T

Question 38

Accelerated death benefits paid to someone terminally ill (will die w/in 2 yrs according to doctor)

Answer 38

NT

Question 39

Accelerated death benefits paid to chronically ill individual

Answer 39

NT, if used for insured's long-term care services Per diem over $330 per day are taxable.

Question 40

Unemployment benefits paid from regular union dues

Answer 40

T

Question 41

Unemployment compensation

Answer 41

T

Question 42

Workers' comp paid to worker or survivors

Answer 42

NT

Question 43

No-fault car insurance benefits for loss of earnings/earning capacity

Answer 43

NT

Question 44

Notary public fees and election precinct official pay

Answer 44

T

Question 45

Jury pay

Answer 45

T. Report full amount on line 21. Deduct pay given to employer on line 36.

Question 46

Earnings for service in elective or appointive office of U.S. or other govt. body

Answer 46

T

Question 47

Fees paid to executors

Answer 47

T

Question 48

Payment for an amount deducted in prev. yr. if provided a tax benefit

Answer 48

T

Question 49

Any amount used for room, board, or expenses other than tuition, fees, and course requirements

Answer 49

T

Question 50

Reduced tuition (below graduate level) received b/c student or parent is a school employee

Answer 50

NT, if program does not favor highly paid employees

Question 51

Disability payments from an employer plan received before retirement age.

Answer 51

T, as wages

Question 52

Disability payments from an employer plan received after retirement age.

Answer 52

T, as pension/annuity.

Question 53

Disability pension based on years of service.

Answer 53

T. NT if not based on years of service.

Question 54

Amounts paid by VA to veterans and their families, such as pensions for disabilities, etc.

Answer 54

NT

Question 55

Peace Corps allowance designed as compensation paid to volunteer and/or family members.

Answer 55

T

Question 56

VISTA meal and lodging allowances.

Answer 56

T

Question 57

Peace Corps payments for living expenses.

Answer 57

NT

Question 58

Expense reimbursements received in connection w/volunteer tax counseling for elderly.

Answer 58

NT

Question 59

Work training program benefits

Answer 59

T, in excess of welfare benefits which otherwise would have been paid.

Question 60

Workfare payments for compensation of services under TANF program

Answer 60

T; otherwise, TANF payment

Question 61

ATAA payments

Answer 61

T