Brad was disabled for part of the year and he received $11,500 of benefits from a disability insurance policy purchased by Brad's employer. Brad must include all $11,500 of benefits in his gross income because Brad was not taxed on the disability insurance premiums paid by his employer.

Question

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Disability insurance benefits are generally taxable if the premiums were paid by the employer and not included in the employee's gross income. Since Brad did not pay taxes on the premiums, he must include the full amount of benefits he received in his taxable income.

Brad Was Disabled for Part of the Year and He