Hal Gore Won a $1 Million Prize for Special Contributions

question 51

Multiple Choice

Hal Gore won a $1 million prize for special contributions to environmental research. This prize is awarded for public achievement, and Hal directed the awarding organization to transfer $400,000 of the award to the Environmental Protection Agency. How much of the prize should Hal include in his gross income?

• A) $400,000
• B) $600,000
• C) $1,000,000
• D) None of the choices are correct because all prizes are excludible
• E) None of the choices are correct because prizes from charities are excludible

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Definitions:

Ownership Interest

Refers to the percentage or portion of a company that is owned by a shareholder, indicating a claim on assets and possibly a right to the income of the company.

Equity Method

An accounting technique used to record investments in which the investor has significant influence over the investee but does not control it outright.

Voting Shares

Shares that give the shareholder the right to vote on company matters, such as electing directors and approving company policies.

Purchase

The act of acquiring goods or services in exchange for money, signifying a transaction between two parties.