Chapter 5 Question 1

a. Your friend told you that as they were walking into Albertsons last week that balloons were dropped on them and they won a shopping spree for $2,000 for being the one-millionth customer. Your friend asks you if this is taxable, yes or no?

b. Tomas filed his taxes last year and itemized his deduction. His itemized deductions were $1,030 more than the standard deduction last year. Included in his itemized deductions was $1,250 of NM state income taxes. In the current year, he received a refund of New Mexico state income taxes of $750 he paid last year. How much, if any of this refund is taxable?

c. All of the following are included in taxable income except:

Wages, unemployment income, prizes, gambling income, workmans compensation.

d. Bart provided electrical services to several clients this year as a side business. Bart believes that if he does not receive cash, he will not have to claim the income. He asked his clients to pay him in the following methods: Gift cards, exchange of services, concert tickets, or trade for tools or other items. Are all of these methods taxable or none?