Question

Samuel slips on an icy spot in front of an apartment and is hospitalized for three weeks. The owner of the apartment pays Samuel $14,000 for medical expenses and gives him $4,000 for his pain and suffering. Samuel receives his regular $1,800 salary from his employer while he couldn't work and also receives $7,000 in disability pay from a plan that he had purchased. Samuel's gross income from these payments is: a. $-0-. b. $1,800. c. $2,500. d. $5,800. e. $8,800.

Answer 1

B) $1,800.

Step-by-step explanation:

$14,000 in medical expenses are not part of Samuel's gross income.

$7,000 in disability payments are not included in Samuel's gross income because he paid the premiums.

$4,000 in pain and suffering compensation are not part of your gross income.

The only payments that are part of Samuel's gross income and therefore are taxed, are his regular monthly salary payments = $1,800. If Samuel's disability insurance premium had been paid by his employer, then the $7,000 would have been taxable.