Question

Joanna received $60,000 compensation from her employer, the value of her stock in ABC company appreciated by $5,000 during the year (but she did not sell any of the stock), she received $30,000 of life insurance proceeds from the death of her husband. What is the amount of Joanna's gross income from these items?

A) $60,000,
B) $65,000
C) $95,000.
D) $90,000

Answer 1

A) $60,000,

Step-by-step explanation:

$60,000 is the compensation that she receives is her gross income as this is the amount she receives from her employer in return for working for her employer. The 5,000 stock appreciation will not count as income as it is not realized and is just an increase in the price of a stock she owns but because she hasn't sold the stock yet, the increase in value is unrealized and will not count towards her gross income. The insurance proceeds will also not count as gross income as life insurance claims are not considered income so the total gross income will be 60,000.