James, a cash basis taxpayer, received the following compensation and fringe benefits in the current year: $\begin{array}{llr}
\text { Salary } &\$66,000\
\text { Disability income protection premiums } &3,000\
\text {Long-term care insurance premiums } &4,000
\end{array}$
? His actual salary was $72,000.He received only $66,000 because his salary was garnished and the employer paid $6,000 on James's credit card debt he owed.The wage continuation insurance is available to all employees and pays the employee three-fourths of the regular salary if the employee is sick or disabled.The long-term care insurance is available to all employees and pays $150 per day towards a nursing home or similar facility.What is James's gross income from the above?

Question

James, a cash basis taxpayer, received the following compensation and fringe benefits in the current year: $\begin{array}{llr}
  \text { Salary } &\$66,000\
 \text { Disability income protection premiums } &3,000\
 \text {Long-term care insurance premiums  } &4,000
\end{array}$
 ? His actual salary was $72,000.He received only $66,000 because his salary was garnished and the employer paid $6,000 on James's credit card debt he owed.The wage continuation insurance is available to all employees and pays the employee three-fourths of the regular salary if the employee is sick or disabled.The long-term care insurance is available to all employees and pays $150 per day towards a nursing home or similar facility.What is James's gross income from the above?

Quizplus · Accepted Answer

James's gross income includes his entire salary of $72,000. The garnishment of his salary to pay a debt does not reduce his gross income. Disability income protection and long-term care insurance premiums paid by the employer are not included in gross income if they are provided as a fringe benefit.

James, a Cash Basis Taxpayer, Received the Following Compensation and Fringe