Your Friend Scotty Informs You That He Received a "Tax-Free

question 15

Multiple Choice

Your friend Scotty informs you that he received a "tax-free" reimbursement in 2012 of some medical expenses he paid in 2011.Which of the following statements best explains why Scotty is not required to report the reimbursement in gross income?

• A)Scotty itemized deductions in 2011.
• B)Scotty did not itemize deductions in 2011.
• C)Scotty itemized deductions in 2012.
• D)Scotty did not itemize deductions in 2012.
• E)Scotty itemized deductions in 2012 but not in 2011.

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Definitions:

Adultery

A voluntary sexual relationship between a married person and someone other than their lawful spouse.

Affairs

Secretive relationships involving emotional or sexual intimacy with someone other than a person's committed partner or spouse.

Lasting Relationship

A relationship characterized by enduring bonds, commitment, and mutual affection over a long period.

Madams

Women who run establishments that provide prostitutes or are in charge of organized prostitution rings.