Which of the following items will result in an increase in gross income?
A) Receipt of a $10,000 check from the bank. The check is for a student loan.
B) Receiving a $10,000 award from a university for high grades and high SAT scores. The award is used to pay tuition.
C) Preparing a mechanic's tax return in exchange for the mechanic replacing the muffler on your car.
D) None of the above will be included in gross income.
C) Preparing a mechanic's tax return in exchange for the mechanic replacing the muffler on your car.
This is a taxable exchange of services, and both parties will realize income equal to the value of services received.
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The interest charged by the bank, at the rate of 9%, on a 3-month, discounted note payable for $100,000 is:
A) $9,000. B) $2,250. C) $750. D) $1,000.
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