J.K. Lasser's Your Income Tax 2023, 2nd Edition

CHAPTER 11Other Income

11.1	Prizes and Awards	315
11.2	Lottery and Sweepstake Winnings	315
11.3	Gambling Winnings and Losses	315
11.4	Gifts and Inheritances	317
11.5	Refunds of State and Local Tax Deductions	318
11.6	Other Recovered Deductions	321
11.7	How Legal Damages Are Taxed	322
11.8	Cancellation of Debts You Owe	325
11.9	Schedule K‐1	328
11.10	How Partners Report Partnership Profit and Loss	328
11.11	When a Partner Reports Income or Loss	329
11.12	Partnership Loss Limitations	330
11.13	Tax Audits of Partnerships	330
11.14	Stockholder Reporting of S Corporation Income or Loss	330
11.15	How Beneficiaries Report Estate or Trust Income	332
11.16	Reporting Income in Respect of a Decedent (IRD)	332
11.17	Deduction for Estate Tax Attributable to IRD	332
11.18	How Life Insurance Proceeds Are Taxed to a Beneficiary	333
11.19	A Policy with a Family Income Rider	334
11.20	Selling or Surrendering Life Insurance Policy	334
11.21	Jury Duty Fees	336
11.22	Foster Care Payments	336
11.23	Virtual Currency	336

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

• State or local tax refunds if the tax was claimed as an itemized deduction and the refunded amount provided a tax benefit (11.5).
• Prizes, gambling winnings, and awards (11.2‐11.3).
• Cancellations of debt, but there are several exceptions, such as for debts discharged in a bankruptcy ...