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1.1.11. Trish Durwood works for a small retail clothing store. She earned $26,000 during the year. Because of a cash flow problem in April, Trish did not receive her $500 weekly check but instead was given a credit of $500 on the purchased clothing for her family. How much income should be shown on her Form W-2 and reported on her Form 1040? A. $26,000 B. $25,500 C. $26,500 D. $25,000 l0 1.12. In the current year, Emil Gow won $5,000 in a state lottery and spent $400 for the purchase of lottery current-year income tax return. The amount of lottery year gross income is tickets. Emil elected the standard deduction on his winnings that should be included in Emil's current- A. $0 B. $700 C. $4,600 D. $5,000 1.1.18. Optimistic borrowed $20,000 to buy a machine for his printing business. Shortly thereafter, the economy went into a deep recession, and Optimistic was not able to repay the debt, although he was not insolvent. In the current year, the creditor reduced the debt by $10,000 so Optimistic could afford to pay it. The creditor was not the seller of the machine. As a sult of this reduction of debt, A. The purchase price of the machine is adjusted B. to reduce Optimistic's basis in the machine. Optimistic has $10,000 of income. and the basis of the machine must be reduced. Any tax effect from the reduction of the debt is C. The debt is a qualified business indebtedness D. deferred until final payment by Optimistic

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