Kennedy had a very busy 2021 as she graduated with a master's in public health in May and began work in July. She has asked you for help with her 2021 tax return. For each item, indicate whether: 

(i) the item would be recognized in gross income this year, 

(ii) the item would be excluded or deferred from gross income this year, or 

(iii) more information is needed.

a. Kennedy elected to contribute $3,000 of her salary into a qualified retirement account. She can’t remember whether it was a traditional or Roth retirement plan.

b. Kennedy held stock in her qualified retirement plan that paid $100 of dividends, and she left the $100 in the account. Again, she can't remember whether it was a traditional or Roth retirement account.

c. Kennedy received a $15,000 inheritance from her dearly departed great aunt.

d. Kennedy needed a vehicle so she struck a deal with a neighbor who had an old car for sale. Kennedy performed 60 hours of babysitting in return for the car which was worth approximately $1,000.

e. Kennedy sold a condo for $150,000 which she purchased for $130,000 five years ago. She did not live in the condo at any point.

f. Kennedy sold a portion of a Bitcoin for $1,500. She bought it for $800 and held it in a regular investment account.

g. Kennedy earned $75 of interest but she didn’t mention where the interest came from.

Answer rating: 100% (QA)

a item was recognized in gross income Gross income includes essentially all income forms like wages ... View the full answer