Please explain how yu got answer Hazel, a solvent individual but a recovering al
ID: 2503072 • Letter: P
Question
Please explain how yu got answer
Hazel, a solvent individual but a recovering alcoholic, embezzled $6,000 from her employer. In the same year that she embezzled the funds, her employer discovered the theft. Her employer did not fire her and told her she did not have to repay the $6,000 if she would attend Alcoholics Anonymous. Hazel met the conditions and her employer canceled the debt. Hazel did not realize any income because her employer made a gift to her. Hazel must include $6,000 in gross income from discharge of indebtedness. Hazel must include $6,000 in gross income under the tax benefit rule. Hazel may exclude the $6,000 from gross income because the debt never existed. None of the above. Marsha is single, had gross income of $50,000, and incurred the following expenses: Charitable contribution $2,000 Taxes and interest on home 7,000 Legal fees incurred in a tax dispute 1,000 Medical expenses 3,000 Penalty on early withdrawal of savings 250 Her AGI is: $39,750. $49,750. $40,000. $39,000. None of the above. Which of the following is not a "trade or business" expense? Interest on business indebtedness. Property taxes on business property. Parking ticket paid on business auto. Depreciation on business property. All of the above are "trade or business" expenses.Explanation / Answer
31). c
32). b -- Penalty are itemized deductions and $50,000 is not a choice, that means penalty from early withdrawl of savings of $250 must be an expense for AGI. So $50,000 - $250 = $ 49,750
33). c -- Parking ticket paid on Business auto.