Lindsay Corporation made the following payments to the family of Luke Marshall,an employee who died during the year. $5,000 for Luke's final paycheck that he failed to collect
$10,000 for accrued vacation days as required by the employment contract
$25,000 in admiration of Luke's outstanding service to the community
What is the total amount that Luke's family must include in income?

Question

Quizplus · Accepted Answer

The $5,000 final paycheck and $10,000 accrued vacation days are taxable income to Luke’s family. The $25,000 admiration payment is exempt income as it is intended to recognize Luke’s outstanding service and not because of his death. Therefore, the total amount that Luke's family must include in income is $15,000.

Lindsay Corporation Made the Following Payments to the Family of Luke