During the year,Cathy received the following: • Dividends of $4,000 from Lindsay Corporation.Cathy's father owns the stock and directed the corporation to send the dividends to Cathy.
• A car worth $30,000 for being the 1,000th customer at a car dealership.
• $5,500 cash gift from her uncle.
• $10,000 inheritance from her grandmother.
What amount must Cathy include in gross income?

Question

Quizplus · Accepted Answer

Cathy must include the $30,000 value of the car in her gross income because it is a prize. The dividends are not included because they were directed to her by her father, and gifts and inheritances are generally not included in gross income.

During the Year,Cathy Received the Following: • Dividends of $4,000