Question

Which one of the following would be included in Bob's gross income?

a) Bob received $1,000 worth of legal services from Mary in exchange for providing Mary $1,000 worth of accounting services
b) Bob received $10,000 of life insurance proceeds
c) After Bob's TV was stolen, he received $500 in theft loss insurance proceeds
d) Bob received $2,000 of worker's compensation employment after he was injured on the job

Answer 1

Bob must include the $1,000 worth of legal services in his gross income, as this is considered barter income. Life insurance proceeds, theft loss insurance proceeds, and workers' compensation are generally not taxable and not included in gross income.

Step-by-step explanation:

The student's question pertains to which type of income should be included in Bob's gross income. Among the options given, the correct answer is:

a) Bob received $1,000 worth of legal services from Mary in exchange for providing Mary $1,000 worth of accounting services.

This is considered barter income and is taxable in the year the services were provided. The fair market value of the services received is included in the gross income. The other options provided, which include life insurance proceeds, theft loss insurance proceeds, and workers' compensation, are generally not included in gross income for tax purposes.