Question

Exclusions for emotional distress resulting from someone else's injury:

a) Gross income
b) Taxable income
c) Adjusted gross income
d) Deductible income

Answer 1

The correct exclusion for emotional distress resulting from someone else's injury is adjusted gross income.

Step-by-step explanation:

The correct exclusion for emotional distress resulting from someone else's injury is c) Adjusted gross income.

Taxable income is calculated by subtracting deductions and exemptions from your adjusted gross income. It represents the income that is subject to taxation. However, emotional distress resulting from someone else's injury is not considered taxable income and is excluded from the calculation.

For example, let's say your adjusted gross income is $50,000 and you have $10,000 in deductions and exemptions. Your taxable income would be $40,000. If you received a settlement for emotional distress resulting from someone else's injury, that amount would not be included in your taxable income.