Please use this copy, it shows the calculations better
24. When stating or calculating his gross income, Herman should include the dividend
income of $2,200 and also the capital gain of $10,000. In the income, the inherited stock is
not included, but any more earnings from the stock should count as part of the income
since it is not a part of the inheritance. The interest received from Jordan County School
bonds is not included in the bond interest for the municipal.
27.Earl’s income is $7,000, and this is from the calculation of ;
which are from the free room and board receipts. Supposing the room and board were taken to be
scholarship, such payments could still be counted since they are meant to cater for costs that are
not categorized as direct costs of education. The $5,000 scholarship amount is not counted since
it does not add up to the actual direct costs.
28. In the case for scholarships, they can be excluded up to the total amount of the direct
education costs. For case a, the scholarship is less than the 8000 of direct costs and is excludable
in full. In the second case, case b, the scholarship exceeds Earl’s direct costs and will be taxed
the excess which ...