Homework 2

1. Rachel is a limited partner in Starship Partners. This year Starship reported that Rachel's share of dividend income was $3,700 and his share of municipal interest was $2,750. Early this year Rachel found a bundle of $100 bills in the alley outside his apartment. When no one claimed the money, the cash (a total of $2,400) was returned to Rachel. Finally, Rachel earned salary of $42,000 but almost $6,500 was withheld for income taxes and FICA tax. Compute Rachel's (a) realized income and (b) gross income. BE SURE TO CALCULATE BOTH AMOUNTS.
a) 3,700 + 2,750 + 2,400 + 42,000 = $50,850
b) 3,700 + 2,400 + 42,000 = $48,100
2. Ted works as a painter for local businesses on weekends, and he often provides services in exchange for property. This year Ted provided painting services in exchange for $1,275 of car repair services, $3,570 of groceries, and a certificate of deposit (CD) for $4,050. The (CD) matures next year with interest. Finally, Ted received a gift card that can only be applied for $850 of clothing at a local mall. Ted has only applied the gift card to purchase $100 of clothing. Compute Ted's gross income assuming that he uses the cash basis of accounting.
1,275 + 3,570 + 4,050 + 850 = $9,745
3. Jennifer was married on November 1 of this year and on that day received numerous gifts from her extended family. Her grandfather presented Jennifer with a check for $15,000; her uncle gave Jennifer 1,000 shares of Ford stock worth $10 per share (the uncle purchased the shares for $25 each); and her aunt presented Jennifer with $50,000 of corporate bonds (Jennifer received $1,500 of semiannual interest from the bonds on December 31 of this year). Finally, Jennifer's parents paid off $50,000 of her student loans debt including $2,000 of accrued interest. What amount, if any, must Jennifer include in gross income this year?
$1,500 semiannual