Question

Hal Gore won a $1.25 million prize for special contributions to environmental research. This prize is awarded for public achievement, and Hal directed the awarding organization to transfer $502,500 of the award to the Environmental Protection Agency. How much of the prize should Hal include in his gross income

Answer 1

Answer:

$747,500

Explanation:

Hal must include $1,250,000 - $502,500 = $747,500 in his gross income

A Nobel Prize is one of the most prestigious awards that a person can obtain, but the IRS doesn't care about that. The IRS only cares that you receive money and will tax for it. You can avoid paying taxes only if you contribute money to a qualifying charity or organization (the EPA is a qualifying organization). E.g. President Obama donated the money in 2009 when he won the Nobel Peace Prize.