Question

Which one of the following would not be included in gross income for federal tax purposes?

1) Gifts received from family members
2) Salary earned from a job
3) Interest earned on a savings account
4) Dividends received from stock investments

Answer 1

Gifts received from family members would not be included in gross income for federal tax purposes.

Step-by-step explanation:

The correct answer is 1) Gifts received from family members would not be included in gross income for federal tax purposes.

In general, gross income includes all income that a taxpayer receives, unless specifically excluded by law. Most gifts received from family members are not considered taxable income and do not need to be reported on the federal income tax return.

However, it is important to note that there are certain gift-giving situations where the gift may be subject to taxes, such as if the gift exceeds a certain amount or if it is given as compensation for services rendered. In these cases, the gift may be considered taxable income and should be reported accordingly.