| Course | GF592 Income Tax Planning and Strategies |
|---|---|
| Unit | Unit 2 |
| Paper type | Gross income worksheet |
| Length | About 790 words, 5 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | MS in Finance |
| Updated | October 2026 |
Free sample paper for GF592 Unit 2
Nine Receipts, Four of Them Income: A Unit 2 Gross Income Exercise for a Software Engineer
[Student Name]
Purdue University Global
GF592: Income Tax Planning and Strategies
Unit 2 Gross Income Exercise
[Instructor Name]
[Date]
The taxpayer, her receipts and amounts are composite and illustrative; the treatment follows federal law for tax year 2025; the sources cited are real.
The Governing Idea
The tax code starts broad: every gain is income unless some provision carves it out. The Supreme Court's test asks whether the taxpayer became better off, whether the gain was actually received, and whether she controls it (Commissioner v. Glenshaw Glass Co., 1955). Each receipt below is tested against that idea and then against the exclusions that might apply.
The Schedule
Receipts appear in the order they arrived, so each decision is made on its own facts. Each line gives the receipt, its treatment and the planning consequence.
1. Salary, $118,000. Income under Section 61 as compensation. Planning: confirm withholding covers the year's tax after the items below.
2. Restricted stock units vesting, 400 shares at $105, $42,000. Income as wages at vesting, reported on her W-2. Planning: her basis in the shares is $105 each, the value already taxed.
3. Sale of 150 of those shares at $118, proceeds $17,700. Only the gain is income: $17,700 less basis of $15,750, or $1,950, short-term because she held the shares less than a year. Planning: correct the broker's basis, explained below.
4. Loan from her father, $25,000, with a signed note. Not income, because she must repay it. Planning: keep the note, a repayment schedule and interest at the applicable federal rate, so the transfer is not later treated as a gift.
5. Gift from her grandmother, $12,000. Excluded under Section 102. A transfer made out of detached and disinterested generosity is a gift (Commissioner v. Duberstein, 1960). Planning: none for her; her grandmother's gift is under the annual exclusion.
6. Real estate investment trust distribution, $2,400, reported as nondividend. Not income now. Under Section 301(c)(2) it is a return of capital that reduces her basis in the shares. Planning: lower the basis in her records, which will raise a later gain.
7. Travel reimbursement under her employer's accountable plan, $1,860. Not income, because she substantiated the expenses and returned any excess. Planning: keep the expense reports.
8. Insurance recovery for a stolen bicycle, $3,100. Not income, because the payment was less than her basis in the bicycle, so there was no gain. Planning: none.
9. Canceled credit card balance, $9,400. Canceled debt is generally income, but Section 108(a)(1)(B) excludes it to the extent the taxpayer was insolvent just before the cancellation. She was insolvent by $5,700, so $3,700 is income. Planning: file the form that claims the exclusion and keep the insolvency worksheet.
Totals
Income from the four taxable items is $118,000 of salary, $42,000 of vested units, $1,950 of gain and $3,700 of canceled debt, or $165,650 in all. The other five receipts, $44,360 together, are not income.
Sorting by the facts of each receipt rather than by how the money arrived is what keeps $44,360 of nontaxable receipts out of income and keeps $15,750 of already-taxed stock value from being taxed twice.
The Stock Basis Note
The share sale needs the longest note. Her brokerage statement reports the sale of 150 shares with a basis of zero, which is common for stock received from an employer. If she filed the statement as issued, she would report a $17,700 gain instead of $1,950. The $15,750 of value she already paid tax on at vesting would be taxed again, costing about $3,780 at her 24 percent rate. The correction is made on the form that reports capital sales, adjusting the basis to the value at vesting and keeping the vesting statement as support (Internal Revenue Service, 2025).
The Insolvency Note
Insolvency is measured immediately before the debt was canceled. Her liabilities, including the card balance, a car loan and student loans, came to $61,300. Her assets, including cash, her car, her retirement account and the shares, totaled $55,600. She was insolvent by $5,700. Only that amount of the $9,400 is excluded; the remaining $3,700 is income. Her retirement account counts as an asset in this test even though it is protected from creditors, which surprises many taxpayers.
The Loan Note
Loans between family members are not income when there is a real obligation to repay. The signed note, a schedule and interest at the federal rate protect her if the transfer is questioned. A loan at no interest could create imputed interest for her father in some cases, but loans of this size between individuals fall under exceptions that limit the effect.
References
Commissioner v. Duberstein, 363 U.S. 278 (1960).
Commissioner v. Glenshaw Glass Co., 348 U.S. 426 (1955).
Internal Revenue Service. (2025). Taxable and nontaxable income (Publication 525). https://www.irs.gov/publications/p525
What the GF592 Unit 2 assignment asks for
The Unit 2 prompt in GF592 supplies a year of receipts, or has you assemble one, and wants every item classified. Open with the sweeping Section 61 rule and the court test for an accession to wealth, then test every item against it in turn. For each receipt give the amount, whether it is income, the Code section or case that decides it, and what the taxpayer should do now because of that answer. Watch for receipts that look like income and are not, such as loans, gifts and reimbursements under an accountable plan. Watch also for items that are only partly income, like a sale of shares where basis has already been taxed, or a canceled debt with an exclusion. Total the taxable items at the end. Add short notes for any line where the paperwork a client receives would mislead them, and cite the cases and IRS publications you relied on in APA 7.
How the GF 592 Unit 2 example is put together
A short opening section states the rule from Glenshaw Glass: an undeniable gain, clearly realized, over which the taxpayer has control. The nine receipts follow in the order they arrived, each with a treatment and a planning line. Salary and $42,000 of vested units are wages. The sale of 150 shares produces only $1,950 of short-term gain because her basis is the $15,750 already taxed at vesting. The family loan is supported by a signed note, and Duberstein decides the grandmother's gift. A nondividend REIT payment lowers basis instead of adding income. The totals line reaches $165,650 of income and $44,360 of excluded receipts. Three notes follow. The basis note shows the $3,780 cost of filing the broker form as issued, the insolvency note sets $61,300 of debts against $55,600 of assets, and the loan note explains what keeps the transfer from being recast as a gift.
GF592 Unit 2 rubric: what earns full points
Most of the points on this GF592 worksheet depend on getting each classification right and naming the authority that supports it. A line that says "not income" without a reason earns little, while one that cites Section 102, Section 301 or the insolvency exclusion and applies it to the facts earns full credit. Graders weigh the partial items heavily, because the stock sale and the canceled debt are where most students misstate the figure. The planning column is also scored: a classification is only useful if it tells the client what to keep, correct or file. Notes that show the arithmetic, such as the asset and liability totals for the insolvency test, let an instructor verify the answer. Supreme Court cases and IRS Publication 525, listed in APA 7, give the worksheet its authority, and a correct total ties everything together.
Common GF592 Unit 2 mistakes, and how to avoid them
Students working GF592 Unit 2 often report the full proceeds of a stock sale as income because the broker shows no basis. Another frequent slip is treating every canceled debt as taxable without testing insolvency, or testing it without counting the retirement account as an asset. Family transfers cause trouble too: a loan with no note can be challenged as a gift, and a worksheet should say what paperwork supports the answer. Some writers list the rule for each receipt but skip the planning step, which leaves the client with a classification and nothing to do. Others mix up the order and decide later lines with facts from earlier ones. A REIT payment labeled nondividend is easily misread as dividend income. Before submitting, add your taxable lines again and check that the excluded lines plus the taxable lines equal every dollar the client received during the year.
Get a GF592 Unit 2 example written to your instructions
Drop in the receipts or fact pattern your GF592 Unit 2 prompt lists, the tax year it names and the rubric. A custom schedule gives each receipt a treatment, a narrowly cited provision and a planning consequence, then reconciles what arrived to gross income. It is coursework rather than tax advice. The first sample is free; 24-48h. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
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GF592 Unit 2 questions, answered
Why does a zero basis appear on the broker statement?
Brokers often report the cost of shares acquired through compensation as zero or leave it blank, because the value was taxed through payroll rather than paid in cash. The correct basis is the value already included as wages. The sample adjusts it on the return and notes the supplemental statement that supports the figure, since filing as issued would tax the same value twice.
When is a family loan treated as a gift?
When the facts suggest nobody expects repayment: no note, no schedule, no interest and no enforcement. A signed note with a repayment schedule and interest at the applicable federal rate supports loan treatment. The sample's facts include all three, so the 25,000 is a loan. Where facts are thin, say what documentation would settle the question.
Does canceled debt always count as income?
No. Section 108 excludes it in several situations, including insolvency immediately before the cancellation, to the extent of the insolvency. The sample measures liabilities and assets on that date and excludes 5,700 of a 9,400 cancellation. The exclusion also reduces certain tax attributes, which a planning note should mention even when the amounts are small.
Where can I find a free GF592 Unit 2 sample paper?
This page carries a full GF592 Unit 2 gross income worksheet that classifies nine receipts for a software engineer, with the stock basis correction, the insolvency test, the totals and APA 7 references.
Are reimbursed work travel costs income in GF592 Unit 2?
Not when the employer pays them under an accountable plan, meaning the employee substantiates the expenses and returns any excess. The sample's $1,860 travel reimbursement meets that test, so it stays off the return; the worksheet tells her to keep the expense reports.