During the Year, Cathy Received the Following: • Dividends of $4,000

question 84

Multiple Choice

During the year, Cathy received the following: • Dividends of $4,000 from Lindsay Corporation. Cathy's father owns the stock and directed the corporation to the dividends to Cathy.
• A car worth $30,000 for being the 1,000^th customer at a car dealership.
• $5,500 cash gift from her uncle.
• $10,000 inheritance from her grandmother.
What amount must Cathy include in gross income?

• A) $39,500
• B) $30,000
• C) $49,500
• D) $34,000

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Definitions:

Loan Contract

A legally binding agreement between a borrower and a lender that outlines the terms and conditions of a loan.

Interest Payments

Regular payments made to lenders or bondholders as compensation for the use of borrowed funds, usually calculated as a percentage of the principal.

Nominal Rate

The stated interest rate of a financial product, not adjusted for inflation, which represents the rate before taking into account the compounding period.

Simple Interest

Interest calculated solely on the principal amount of a loan or deposit, over a particular time period.