What amount, if any, must be included in gross income by the following taxpayers

Question

What amount, if any, must be included in gross income by the following taxpayers?

A. Anne received $2,000 from her insurance company when her automobile which cost $3,000 was stolen.

B. Barry received $3,000 from his brother. Barry at initiated a lawsuit against his brother in an effort to recover $3,000 he had previously loaned to him. The brother paid Barry back before the case was tried, and Barry dropped the lawsuit.

C. Carry, an accountant, sued a client in order to collect her fee for doing tax work. WouldCarry's accounting method make any difference?

D. Dave has incurred $6,000 of medical expenses so far this year. He paid $400 of the expenses himself. His insurance company paid $4,000 of the expenses. The hospital is suing Dave and the insurance company for the balance, $1,600.

Explanation / Answer

A) none , since insurance returns are considered as return of capital

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