Question 1

Which of the following would result in life insurance proceeds that are taxable to the recipient?

Accepted Answer

A) A life insurance policy transferred to a creditor in payment of a debt 
B) A life insurance policy in which the insured is the daughter of the taxpayer and the beneficiary is the taxpayer 
C) A life insurance policy transferred by a shareholder to a corporation 
D) A life insurance policy purchased by a taxpayer insuring his or her business partner 
E) A life insurance policy purchased by a corporation insuring an officer. 
A) A life insurance policy transferred to a creditor in payment of a debt 
B) A life insurance policy in which the insured is the daughter of the taxpayer and the beneficiary is the taxpayer 
C) A life insurance policy transferred by a shareholder to a corporation 
D) A life insurance policy purchased by a taxpayer insuring his or her business partner 
E) A life insurance policy purchased by a corporation insuring an officer.

Question 2

Which taxpayer would benefit the most from a tax-free municipal bond compared to a taxable bond?

Accepted Answer

A) A taxpayer whose only income is from Social Security 
B) A taxpayer who won a mega-million-dollar lottery 
C) The average blue collar worker 
D) They would all equally benefit from the tax-free municipal bond 
A) A taxpayer whose only income is from Social Security 
B) A taxpayer who won a mega-million-dollar lottery 
C) The average blue collar worker 
D) They would all equally benefit from the tax-free municipal bond

Question 3

In 2015, what rate would a taxpayer pay on qualified dividend income:

Accepted Answer

a. 15 perc

Question 4

Nicole is a student at USB Law; she receives a $52,000 scholarship for 2015. Of the $52,000, $40,000 is used for tuition, $5,000 is used for books, and $7,000 is used for room and board. How much of the scholarship is excluded from taxable income for Nicole in 2015?

Accepted Answer

A) $5,000 
B) $7,000 
C) $45,000 
D) $47,000 
E) $52,000 
A) $5,000 
B) $7,000 
C) $45,000 
D) $47,000 
E) $52,000

Question 5

Helga receives a $300,000 life insurance payment when her boyfriend Andy dies. How much of the payment is taxable to Helga?

Accepted Answer

None of the payment is taxable

Question 6

Richard, who retired on April 30, 2015, receives a monthly employee annuity benefit of $1,400 payable for life, beginning May 1, 2015. During his years of employment, Richard contributed $29,400 to the company's plan. Richard's age on May 1 is 66. Using the simplified method, how much of the annuity payment amounts received during 2015 ($11,200) may Richard exclude from gross income?
a.$427
b.$1,120
c.$1,680
d.$11,200
e.None of the above

Accepted Answer

The answer of Richard, who retired on April 30, 2015,...

Question 7

Dividend income arising from stock received as a gift is excluded from gross income since the dividends are considered part of the gift.

Accepted Answer

A) True 
 B)False

Question 8

Child support payments are deductible by the spouse making the payments.

Accepted Answer

A) True 
 B)False

Question 9

As a Christmas thank you for being a good employee, Ed's TV Repair gave 62-year-old Edwina three shares of its stock worth $20 per share. Edwina then received dividends of $1 per share related to the stock. How much should be included in Edwina's gross income?

Accepted Answer

A) $0 
B) $3 
C) $60 
D) $63 
E) None of the above 
A) $0 
B) $3 
C) $60 
D) $63 
E) None of the above

Question 10

Taxpayers must report interest income on Series EE savings bonds as the interest accrues.

Accepted Answer

A) True 
 B)False

Question 11

To pay for college, Henry received the following: $1,000 scholarship from the Thespian Club to pay for books
$4,000 scholarship from the Elks Lodge for tuition
$5,000 worth of room and board as a dorm supervisor through a work-study program
​
How much income must Henry report on his tax return?

Accepted Answer

A) $0 
B) $4,000 
C) $5,000 
D) $6,000 
E) $10,000 
A) $0 
B) $4,000 
C) $5,000 
D) $6,000 
E) $10,000

Question 12

In 2015, Uriah received the following interest payments: ​
Interest of $300 on an overpayment of 2014 Federal income taxes
Interest of $400 from his bank certificate of deposit.
Interest of $1,000 on municipal bonds
Interest of $1,500 on United States savings bonds (Series HH)
​
What amount, if any, should Uriah report as taxable interest income on his 2015 individual income tax return?

Accepted Answer

A) $0 
B) $700 
C) $2,200 
D) $3,200 
E) None of the above 
A) $0 
B) $700 
C) $2,200 
D) $3,200 
E) None of the above

Question 13

During the current year, Margaret and John received $24,000 in Social Security benefits. The amount of their adjusted gross income for the year before any Social Security income was $140,000 and they received $19,000 in tax-exempt income.
​
Explain the treatment of their Social Security income for tax purposes and the likely percentage of the Social Security income that will be taxable to Margaret and John.

Accepted Answer

Social Security income is partially taxe

Question 14

Indicate which of the following statements is true.

Accepted Answer

A) Dependent care plans can only be used to cover the costs of caring for a dependent child. 
B) Medical flexible spending accounts can be used to cover dentist fees. 
C) Public transportation may be covered by an employer-provided spending account, but parking can not be covered. 
D) Dependent care accounts may include day care but not preschool 
A) Dependent care plans can only be used to cover the costs of caring for a dependent child. 
B) Medical flexible spending accounts can be used to cover dentist fees. 
C) Public transportation may be covered by an employer-provided spending account, but parking can not be covered. 
D) Dependent care accounts may include day care but not preschool

Question 15

Cash allowances for meals or lodging generally must be included in the employee's income.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is excluded from gross income?

Accepted Answer

A) Prizes 
B) Scholarships for tuition 
C) Hobby income 
D) Rental income 
E) All of the above are included in gross income 
A) Prizes 
B) Scholarships for tuition 
C) Hobby income 
D) Rental income 
E) All of the above are included in gross income

Question 17

Steve and Laura were divorced in 2009. Laura pays Steve alimony of $1,200 a month. The payment amount was agreed upon in the decree of divorce. To save money, Steve and Laura still live together. Are the alimony payments that Steve receives in 2015 includable in his income? Can Laura take a deduction for alimony paid?

Accepted Answer

A) Yes, the payments meet all alimony payment requirements. 
B) Yes, alimony is always taxable. 
C) No, only some of it is tax-exempt because Laura pays Steve too much alimony. 
D) No, since Steve and Laura still live together, the payments are not considered alimony. 
E) Yes, alimony payments are not tax-exempt. 
A) Yes, the payments meet all alimony payment requirements. 
B) Yes, alimony is always taxable. 
C) No, only some of it is tax-exempt because Laura pays Steve too much alimony. 
D) No, since Steve and Laura still live together, the payments are not considered alimony. 
E) Yes, alimony payments are not tax-exempt.

Question 18

​The amount of employee reimbursement in 2015 for parking and mass transit costs are $250 per month each.

Accepted Answer

A) True 
 B)False

Question 19

Elsie received the following distributions from Virginiana Mutual Fund for the calendar year 2015: Elmer, Elsie's husband, did not own any of the Virginiana Mutual Fund shares, but he did receive $1,600 in interest on a savings account at the Moss National Bank. Elmer and Elsie filed a joint income tax return for 2015. What portion of the distributions from Virginiana Mutual Fund is taxable as ordinary income on their 2015 individual income tax return?

Accepted Answer

A) $0 
B) $250 
C) $420 
D) $500 
E) None of the above 
A) $0 
B) $250 
C) $420 
D) $500 
E) None of the above

Question 20

Cynthia, age 64, retired in June. Starting in July, Cynthia received $2,000 per month from an annuity. She has contributed $260,000 to the annuity. Her life expectancy is 20 years. How much is excluded from income using the simplified method? Use 260 as the factor to divide by.
​1. Enter total amount received this year
2. Enter cost in plan at the annuity starting date
3. Factor at annuity starting date 260
4. Divide line 2 by line 3
5. Multiply line 4 by the number of monthly payments this year
6. Amount, if any, recovered tax free in prior years
7. Subtract line 6 from line 2
8. Enter the smaller of line 5 or 7
9. Taxable amount this year. Subtract line 8 from line 1

Accepted Answer

$6,000 is excluded from income. See calc

Which of the following would result in life insurance proceeds that are taxable to the recipient?

Which taxpayer would benefit the most from a tax-free municipal bond compared to a taxable bond?

In 2015, what rate would a taxpayer pay on qualified dividend income:

Nicole is a student at USB Law; she receives a $52,000 scholarship for 2015. Of the $52,000, $40,000 is used for tuition, $5,000 is used for books, and $7,000 is used for room and board. How much of the scholarship is excluded from taxable income for Nicole in 2015?

Helga receives a $300,000 life insurance payment when her boyfriend Andy dies. How much of the payment is taxable to Helga?

Dividend income arising from stock received as a gift is excluded from gross income since the dividends are considered part of the gift.

Child support payments are deductible by the spouse making the payments.

As a Christmas thank you for being a good employee, Ed's TV Repair gave 62-year-old Edwina three shares of its stock worth $20 per share. Edwina then received dividends of $1 per share related to the stock. How much should be included in Edwina's gross income?

Taxpayers must report interest income on Series EE savings bonds as the interest accrues.

To pay for college, Henry received the following: $1,000 scholarship from the Thespian Club to pay for books $4,000 scholarship from the Elks Lodge for tuition $5,000 worth of room and board as a dorm supervisor through a work-study program How much income must Henry report on his tax return?

Indicate which of the following statements is true.

Cash allowances for meals or lodging generally must be included in the employee's income.

Which of the following is excluded from gross income?

The amount of employee reimbursement in 2015 for parking and mass transit costs are $250 per month each.

The Individual Income Tax Return

Business Income and Expenses, Part I

Business Income and Expenses, Part II

Itemized Deductions and Other Incentives

Credits and Special Taxes

Accounting Periods and Methods and Depreciation

Capital Gains and Losses

Withholding, Estimated Payments, and Payroll Taxes

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters

Exam 2: Gross Income and Exclusions

Which of the following would result in life insurance proceeds that are taxable to the recipient?

Which taxpayer would benefit the most from a tax-free municipal bond compared to a taxable bond?

In 2015, what rate would a taxpayer pay on qualified dividend income:

Nicole is a student at USB Law; she receives a $52,000 scholarship for 2015. Of the $52,000, $40,000 is used for tuition, $5,000 is used for books, and $7,000 is used for room and board. How much of the scholarship is excluded from taxable income for Nicole in 2015?

Helga receives a $300,000 life insurance payment when her boyfriend Andy dies. How much of the payment is taxable to Helga?

Dividend income arising from stock received as a gift is excluded from gross income since the dividends are considered part of the gift.

Child support payments are deductible by the spouse making the payments.

As a Christmas thank you for being a good employee, Ed's TV Repair gave 62-year-old Edwina three shares of its stock worth $20 per share. Edwina then received dividends of $1 per share related to the stock. How much should be included in Edwina's gross income?

Taxpayers must report interest income on Series EE savings bonds as the interest accrues.

To pay for college, Henry received the following: $1,000 scholarship from the Thespian Club to pay for books $4,000 scholarship from the Elks Lodge for tuition $5,000 worth of room and board as a dorm supervisor through a work-study program ​ How much income must Henry report on his tax return?

Indicate which of the following statements is true.

Cash allowances for meals or lodging generally must be included in the employee's income.

Which of the following is excluded from gross income?

​The amount of employee reimbursement in 2015 for parking and mass transit costs are $250 per month each.

The Individual Income Tax Return

Business Income and Expenses, Part I

Business Income and Expenses, Part II

Itemized Deductions and Other Incentives

Credits and Special Taxes

Accounting Periods and Methods and Depreciation

Capital Gains and Losses

Withholding, Estimated Payments, and Payroll Taxes

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters

To pay for college, Henry received the following: $1,000 scholarship from the Thespian Club to pay for books $4,000 scholarship from the Elks Lodge for tuition $5,000 worth of room and board as a dorm supervisor through a work-study program How much income must Henry report on his tax return?

The amount of employee reimbursement in 2015 for parking and mass transit costs are $250 per month each.