In 2016, Sarah (Who Files as Single) Had Silverware Worth

question 79

Multiple Choice

In 2016, Sarah (who files as single) had silverware worth $10,000 (basis $6,000) stolen from her home. Sarah's insurance company told her that her policy did not cover the theft. Sarah's other itemized deductions last year were $2,000. She had AGI of $30,000 last year. In August of 2017, Sarah's insurance company decided that Sarah's policy did cover the theft of the silverware and they paid Sarah $5,000. Determine the tax treatment of the $5,000 received by Sarah during 2017.

• A)None of the $5,000 should be included in gross income.
• B)$2,900 should be included in gross income.
• C)$5,000 should be included in gross income.
• D)Last year's return should be amended to include the $5,000.
• E)None of the above.

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Definitions:

Gene Code

Refers to the sequences of nucleotides in DNA or RNA that determine the specific amino acid sequence in the synthesis of proteins, essential for the functioning and development of an organism.

Proteins

Large molecules essential for the structure, function, and regulation of the body's tissues and organs, made up of amino acids.

Nucleus

The central part of an atom containing protons and neutrons, or a membrane-enclosed organelle found in eukaryotic cells that contains the genetic material.

Chromosomes

Thread-like structures located inside the nucleus of animal and plant cells, made of protein and a single molecule of deoxyribonucleic acid (DNA).