Fred is a full-time teacher. He has written a book and receives royalties from it. Fred's mother, Mabel, is age 65 and lives on her Social Security benefits and gifts from her son, Fred. This year Fred directed the publisher to make the royalty check payable to Mabel because she needs the money for support. Fred must include the amount of the royalty check in his gross income.

Question

Quizplus · Accepted Answer

Even though the royalty check was made payable to Mabel, the income still ultimately belongs to Fred as he is the author of the book. Therefore, he must include the amount of the royalty check in his gross income.

Fred Is a Full-Time Teacher