Requirement For each of the following, indicate whether the amount is taxable:

a. Peggy won $4,000 in the state lottery.
b. Jane won a $500 prize for her entry in a poetry contest.
c. Linda was awarded $2,000 when she was selected as "Teacher of the Year" by the local school district.

Answer and Explanation:

All these situations are taxable under lottery tax in the U.S.A, under Federal tax rule, there is 25% amount of winning money you have to pay under lottery tax rule.

If the acceptance of the prize is not based on significant potential benefits and the payment is charged by the education department to a tax-exempt agency approved by Linda, option "C" might be withheld from income.

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.