[nib]

mcq complete following both conditions for the award to be non taxable .But still answer shows taxable award amount=10,000 .why ?? It seem some clue is missing out by me . pls help.

• The recipient was selected through no action on his part.

• Substantial future services are not required.

mcq:

In 2015, Joan accepted and received a $10,000 award for outstanding civic achievement. Joan was selected without any action on her part, and no future services are expected of her as a condition of receiving the award. What amount should Joan include in her 2015 gross income in connection with this award?

A. $0

B. $4,000

C. $5,000

D. $10,000

ans= 10000

[Shovel]

From Becker R1-45:
Taxable Miscellaneous Income:

Prizes and Awards:
The fair market value of prizes and awards is taxable income. An exclusion from income for certain prizes and awards applies where the winner is:
1. selected for the award without entering into a contest (ie. without any action on the winner's part)
AND
2.assigns the award directly to a governmental unit or charitable organization.

Your fact pattern is missing #2 and thus is taxable. If the recipient had donated the $10,000 award to charity or to the government, then it would be nontaxable.

AUD 11/15 91
BEC 1/16 83
REG 2/16 79
FAR 7/16

[nib]

hello ‘shovel,

thanks a lot .

So awards received is non taxable only when “””” all “””””of the stated conditions must be completed .
I thought it as “”””any one “”””of the condition would make it non taxable .

so I understood now .

[Author]

Replies