Daughter receives a salary of $50,000, a year-end bonus of $1,000, a $1,000 gift, and a $1,000 dividend from her father's estate. What amount is included in Daughter's gross income?

• A. $50,000
• B. $51,000
• C. $52,000
• D. $57,000

Answer: (C)

Understanding gross income: amounts received for services are included, gifts are excluded, and dividends are included. The daughter’s salary and the year-end bonus are compensation for services, so they are both part of gross income. The $1,000 gift is not included in gross income for the recipient. The $1,000 dividend from the estate represents income to the recipient and is included as dividend income. Add the items that count: 50,000 + 1,000 + 1,000 = 52,000. So, the amount included in gross income is 52,000.