Hal Gore won a $1 million prize for special contributions to environmental research. This prize is awarded for public achievement, and Hal directed the awarding organization to transfer $400,000 of the award to the Environmental Protection Agency. How much of the prize should Hal include in his gross income?

Question

Quizplus · Accepted Answer

Hal should include $600,000 in his gross income ($1 million prize minus $400,000 donated to the EPA). Prizes and awards are generally includible in gross income, unless the recipient donates the entire amount to a qualified charitable organization. In this case, Hal donated only a portion of the prize to charity, so he must include the remainder in his gross income.

Hal Gore Won a $1 Million Prize for Special Contributions