Unemployment compensation - Page 2

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  • February 16, 2012 at 5:39 am #166478
    Anonymous
    Inactive

    Question from Wiley 2011 Test bank:

    Wages

    $18,000

    Interest income from investments in municipal bonds

    400

    Unemployment compensation

    1,500

    What is the total amount that must be included in gross in­come on Adler’s 2010 income tax return?

    A. $18,000

    B. $18,400

    C. $19,500

    D. $19,900

    Correct answer is: $18,000 (Solution: The unemployment compensation replaces wages which would have been included in gross income).

    Shouldn’t it be $19,500? How does one know unemployment is already included in wages? I have seen various questions such as this in Becker, and the answer is usually $19,500.

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