Chapter 11

Other Income

This chapter discusses various types of payments you may receive; some are taxable and others are not taxable. Examples of taxable items include:

• Taxable state tax refunds, which are reported on Line 10 of Form 1040.
• Prizes, gambling winnings, and awards, which are reported on Line 21 of Form 1040. There are several exceptions, including the new exclusion for debts discharged in a mortgage restructuring or foreclosure (11.8).
• Cancellations of debt, which are reported on Line 21 of Form 1040.
• Your share of partnership, S corporation, trust, or estate income or loss, which is reported in Schedule E according to Schedule K-1 statements provided you by the entity, and then transferred to Line 17 of Form 1040.

Further reporting details are discussed in this chapter.

11.1 Prizes and Awards

11.2 Lottery and Sweepstake Winnings

11.3 Gambling Winnings and Losses

11.4 Gifts and Inheritances

11.5 Refunds of State and Local Income Tax Deductions

11.6 Other Recovered Deductions

11.7 How Legal Damages Are Taxed

11.8 Cancellation of Debts You Owe

11.9 Schedule K-1

11.10 How Partners Report Partnership Profit and Loss

11.11 When a Partner Reports Income or Loss

11.12 Partnership Loss Limitations

11.13 Unified Tax Audits of Partnerships

11.14 Stockholder Reporting of S Corporation Income and Loss

11.15 How Beneficiaries Report Estate or Trust Income

11.16 Reporting Income in Respect of a Decedent (IRD)

11.17 Deduction for Estate Tax Attributable to IRD

11.18 How Life Insurance Proceeds Are Taxed to a Beneficiary

11.19 A Policy With a Family Income Rider

11.20 Selling or Surrendering Life Insurance Policy

11.21 Jury Duty Fees

11.22 Foster Care Payments