Jerome, a cash basis taxpayer, received the following compensation and fringe benefits in 2014:
Salary $40,000
Advance on 2015 salary $6,000
Disability income protection $1,000
Long-term care insurance premiums $4,000
The employer made the salary advance so that Jerome could pay his son's college tuition that was due in December 2014. The following fringe benefits were provided as part of the employer's cafeteria plan. The wage continuation insurance is available to all employees and pays the employee three-fourths of the regular salary if the employee is sick or disabled. The long-term care insurance is available to all employees and pays $150 per day towards a nursing home or similar facility. What is Jerome's gross income from the above?
a. $40,000.
b. $46,000.
c. $50,000.
d. $51,000.
e. None of the above.
Answer: C. $50,000 ($40,000 salary + $6,000 advance + $4,000 long-term care insurance premiums).