customer ’ s bill was $ 8 , but the customer left a $ 100 bill on the table and did not ask for a receipt . Dolly gave the cashier $ 8 and pocketed the $ 100 bill . Dolly concludes that the customer thought that he had left a $ 10 bill , although the customer did not return to correct the apparent mistake . The customer had commented about how much he appreciated Dolly ’ s prompt service . Dolly thinks that a $ 2 tip would be sufficient and that the other $ 98 is like “ found money .” How much should Dolly include in her gross income ?
8 . LO . 2 Sarah , who has a terminal illness ( i . e ., one year or less ), cashed in her life insurance policy ( cost of $ 24,000 and proceeds of $ 50,000 ) to go on an around-the-world cruise ( recommended by her physician ). Ed paid $ 24,000 of life insurance premiums before cashing in his life insurance policy for the $ 50,000 cash surrender value . He decided he could invest the money and earn a higher rate of return . Tom ’ s wife died , and Tom collected $ 50,000 as the beneficiary on a group term life insurance policy purchased by her employer . Determine the amounts that Sarah , Ed , and Tom should include in their gross income .
9 . LO . 2 Joe is a graduate student who works as a resident adviser ( RA ) in the college dormitory . As compensation for serving as an RA , he is not charged the $ 2,200 other students pay for their dormitory rooms for the fall 2014 semester . As an RA , he is required to live in the dormitory . He is also paid $ 1,500 for being available to dormitory residents at all hours during the fall semester . Joe also has a scholarship that pays him $ 12,000 to be used for his tuition for the academic year . He uses the scholarship proceeds to pay $ 6,000 of tuition in August 2014 . In January 2015 , he pays $ 6,000 for his spring semester tuition . What is Joe ’ s gross income for 2014 ?
11 . LO . 2 Wes was a major league baseball pitcher who earned $ 10 million for his 20 wins this year . Sam was also a major league baseball pitcher before a career-ending injury caused by a negligent driver . Sam sued the driver and collected $ 6 million as compensation for lost estimated future income as a pitcher and $ 4 million as punitive damages .