ACC 377 Lecture Notes - Lecture 5: Punitive Damages, Life Insurance, Municipal Bond

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18 May 2018
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gifts: nontaxable to donor if transfer is voluntary
inheritances: nontaxable to beneficiary
income earned on gifts and inheritances (interest on bonds) is taxable
Life Insurance Proceeds
exempt income to beneficiary if paid solely due to death of insured
if owner of life insurance policy cancels the policy and receives cash surrender value, gain must be
recognized to extent amount received exceeds premiums paid on policy
accelerated death benefits: for those who cash out early who have less than 2 years to live (terminally
ill) are excludible
Scholarships and Fellowships
nontaxable to extent of tuition and related expenses (fees, books, supplies and equipment for courses)
Damages
compensatory damages received on account of physical injury or physical sickness are excludible
(including amounts received for loss of income)
compensatory damages for nonphysical injury and punitive damages are taxable
Health-Sponsored Accident and Health Plans
premiums paid by employer for insurance coverage of employee, spouse, and dependents are not
taxable to employee
employer paid insurance premiums for employee's long-term care are excludible up to $360 a day
Meals and Lodging
not taxable to employee if...
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Document Summary

Gifts: nontaxable to donor if transfer is voluntary inheritances: nontaxable to beneficiary income earned on gifts and inheritances (interest on bonds) is taxable. Scholarships and fellowships nontaxable to extent of tuition and related expenses (fees, books, supplies and equipment for courses) Damages compensatory damages received on account of physical injury or physical sickness are excludible (including amounts received for loss of income) compensatory damages for nonphysical injury and punitive damages are taxable. Health-sponsored accident and health plans premiums paid by employer for insurance coverage of employee, spouse, and dependents are not taxable to employee employer paid insurance premiums for employee"s long-term care are excludible up to a day. Meals and lodging not taxable to employee if: on employer premises, for convenience of employer, condition of employment. Dependent care up to can be excluded. Athletic facilities value of use of athletic facilities located on employer premises can be excluded. exclusion towards tuition, fees, books, and supplies.

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