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29 December, 21:33

Hazel's receipts for the year are as follows: Gain on sale of Augusta County bonds $800 Interest on U. S. government savings bonds 400 Interest on state income tax refund 200 Interest on Augusta County bonds 700 Patronage dividend from Potato Growers Cooperative 350 Note: The patronage dividend was received in March of the current year for amounts paid for her (nondeductible) garden and lawn supplies. a. Classify the following items as "Included" or "Excluded" in Hazel's gross income.

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  1. 30 December, 00:59
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    1. Gain on sale of Augusta County bonds $800

    2. Interest on U. S. government savings bonds $400

    3. Interest on state income tax refund $200

    4. Interest on Augusta County bonds $700

    5. Patronage dividend from Potato Growers Cooperative $350

    The 1, 2, and 3 are included in the gross income and the last two statements have no treatment or we can say the 4 and 5 statements are excluded while computing the gross income because in this question, the tax benefit rule is applied.

    These last two statements does not show or reflect any recovered amount that's why we do not consider it.
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