Grady is a member of a large family and received the following payments this year.
For each payment, determine whether the payment constitutes realized income and determine the amount of each payment Grady must include in his gross income. (Leave no answer blank. Enter zero if applicable.)
a) A gift of $30,600 from Grady’s grandfather.
b) 680 shares of GM stock worth $282 per share inherited from Grady’s uncle. The uncle purchased the shares for $82 each, and the shares are worth $287 at year-end.
c) A gift of $53,000 of Ford Motor Bonds. Grady received the bonds on October 31, and he received $1,590 of semiannual interest from the bonds on December 31.
d) A loan of $7,200 for school expenses from Grady’s aunt.

Explanation:

a) The gift is realized income and it is completely excluded from gross income

b) Inheritances are realized income but are entirely excluded from gross income. The increase in the value of the shares during the year has not yet been realized. so it is realized income and completely excluded from gross income

c) The gift of the bonds is realized income that is entirely excluded from gross income. The interest accrued up to October 31st and is excluded because it was accrued at the time of the gift. As such, the accrued income was part of the gift. Grady is taxed on $1590/3 = 530 of interest that accrued after the date of the gift (he is taxed on it when he receives the gift)

d) A bona fide loan is not realized income so it is completely excluded from gross income

a

b

b

a

c

b

d

d

none of these are correct, as they are all sources of american law

a

answer; purpose nondisclosure;