James, a cash basis taxpayer, received the following compensation and fringe benefits in the current year: $\begin{array}{lr}
\text { Salary } & \$ 66,000 \
\text { Disability income protection premiums } & 3,000 \
\text { Long-term care insurance premiums } & 4,000
\end{array}$ His actual salary was $72,000. He received only $66,000 because his salary was garnished and the employer paid the $6,000 owed on James's credit card. 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 toward a nursing home or similar facility. What is James's gross income from the above?

Question

Quizplus · Accepted Answer

James's gross income includes his actual 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 generally not included in gross income.

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