Question

Herbert was employed for the first six months of 2017 and earned $90,000 in salary. during the next six months, he collected $8,800 of unemployment compensation, borrowed $12,000 (using his personal residence as collateral), and withdrew $2,000 from his savings account (including $60 of interest). he received dividends of $550. his luck was not all bad, for in december, he won $1,500 in the lottery on a $5 ticket. calculate herbert's gross income.

Answer 1

Answer: Herbert's gross income is $100,910.

We include Herbert's salary when he was employed, unemployment compensation, dividends and winnings from lottery while calculating gross income.

We don't include his withdrawal from savings accounts, but we consider the $60 interest he earned on his savings account.

We also don't include any loans that he's taken in computing gross income.

So, Herbert's Gross Income will be:

Salary                                                     90000

Unemployment benefits                     + 8800

Dividends                                            +   550

Winnings from lottery                            + 1500

Interest earned on savings account    +    60

Gross Income (Total)                           100910