A Flood Forced a to Live in a Hotel for Two

question 81

Multiple Choice

A flood forced A to live in a hotel for two months before she could return home.On average, it cost A $600 per month to live in her home.A's insurer paid out to A a total of $3,600: $1,800 for each of the two months to cover temporary living costs.A paid a corresponding $3,000 hotel bill.Of the $3,600 paid by the insurance company, how much, if any, is taxable to A?

• A)$1,800
• B)$3,600, reduced by the statutory multiplier
• C)$600
• D)$0
• E)$2,400

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Definitions:

Initial Stockholders

The original investors or owners of a company’s stock at the time of its issuance.

Newly Formed

Refers to an entity or organization that has recently been created or established.

Directors

Individuals elected by shareholders to oversee and make high-level decisions for a corporation, forming its board of directors.

Stockholders' Equity

The residual interest in the assets of a corporation that remains after deducting its liabilities, representing the ownership interest of shareholders.