Home » Test Prep » CPA Regulation » Which of the following would be included in a taxpayer’s gross income?
Darr, an employee of Sorce C corporation, is not a shareholder. Which of the following would be included in a taxpayer’s gross income?
A. Employer-provided medical insurance coverage under a health plan.
B. A $10,000 gift from the taxpayer’s grandparents.
C. The fair market value of land that the taxpayer inherited from an uncle.
D. The dividend income on shares of stock that the taxpayer received for services rendered.
Correct Answer: D
Explanation/Reference: Explanation:
Choice "d" is correct. An individual receiving common stock for services rendered must recognize the fair market value as ordinary income. Any dividends received on that stock would also result in income recognition.
Choice "a" is incorrect. Employer-provided medical insurance is a tax-free fringe benefit.
Choices "b" and "c" are incorrect. Gifts and inheritances are both tax-free to the recipient. (Remember tax is often paid by the person giving the gift or the estate at death.)
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