In Which of the Following Independent Situations Does the Taxpayer

question 79

Multiple Choice

In which of the following independent situations does the taxpayer have taxable income?

• A)Taxpayer L inherited land valued at $200,000 from the estate of his wealthy grandfather.
• B)Taxpayer M, who manages a hotel, is required to live in the hotel for the employer's convenience and as a condition of employment.The value of the lodging, provided without charge, is equal to $500 per month.
• C)Taxpayer N, who is an emergency room nurse, is required to eat in the hospital cafeteria to be available for emergencies.The meals are free to N.
• D)Taxpayer O received $1,000 in interest on $15,000 that her aunt gave her last year.

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Definitions:

Production Possibility

The combination of goods and services that can be produced given available resources and technology, illustrating the trade-offs in production.

Linear

Describes a relationship or function that represents a straight line when graphed, indicating a constant rate of change.

Positive Economics

The branch of economics that concerns the description and explanation of economic phenomena, focusing on facts and cause-and-effect relationships without making judgments.

Normative Economics

The branch of economic analysis that makes prescriptions about the way the economy should work.