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.