Question 1

Amounts received as scholarships for books and tuition may be excluded from the recipient's taxable income.

Accepted Answer

A) True 
 B)False

Question 2

An investor is comparing the following two bonds: a bond from ABC Corp which pays an interest rate of 9 percent per year and a municipal bond which pays an interest rate of 7.9 percent per year.The investor is in the 15 percent tax bracket.Which bond will give the investor a higher after-tax interest rate and for which reason?

Accepted Answer

A) The ABC bond because it pays a 9 percent interest rate,while the municipal bond only pays 7.9 percent . 
B) The ABC bond because it pays an equivalent after-tax rate of 10.6 percent,while the municipal bond pays out an equivalent after-tax rate of 9.3 percent. 
C) The municipal bond because it pays an equivalent after-tax rate of 9.3 percent,while the ABC bond pays out a 9 percent interest rate. 
D) The municipal bond because it pays an equivalent after-tax rate of 7.9 percent,while the ABC bond pays out an equivalent after-tax rate of 7.65 percent. 
E) None of the above is correct. 
A) The ABC bond because it pays a 9 percent interest rate,while the municipal bond only pays 7.9 percent . 
B) The ABC bond because it pays an equivalent after-tax rate of 10.6 percent,while the municipal bond pays out an equivalent after-tax rate of 9.3 percent. 
C) The municipal bond because it pays an equivalent after-tax rate of 9.3 percent,while the ABC bond pays out a 9 percent interest rate. 
D) The municipal bond because it pays an equivalent after-tax rate of 7.9 percent,while the ABC bond pays out an equivalent after-tax rate of 7.65 percent. 
E) None of the above is correct.

Question 3

Bob is a machinist in a remote Alaskan crab-freezing plant.The plant is accessible only by boat or airplane and has no available lodging for rent.Bob's employer provides him with lodging at the plant and pays for all of his electricity,gas,and other utilities,valued at $700 per month.Is the value of the lodging taxable to Bob? Explain.

Accepted Answer

No.The lodging costs paid by t

Question 4

Payments made by an employer for health insurance on behalf of an employee are considered income to the employee at the time the payments are made.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

In some cases,Social Security benefits may be partially taxable.

Accepted Answer

A) True 
 B)False

Question 7

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 8

A scholarship for room and board granted in 2013 is fully taxable to the recipient.

Accepted Answer

A) True 
 B)False

Question 9

In June of 2013,a wealthy aunt gave Janie a stock portfolio worth $150,000.During the year,she collects $4,000 in dividends.How much of these amounts,if any,should Janie include in gross income for 2013? Why?

Accepted Answer

$4,000.The gift of s

Question 10

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 11

In which of the following cases may the employee exclude the meals and/or lodging:

Accepted Answer

A) A taxpayer lives rent-free at the property she manages even though the owner does not require the manager to live on site. 
B) A headmaster at a boarding school is required to be on campus all night. 
C) A president of a major film studio receives a cash allowance to live in Beverly Hills. 
D) An employee has an option of dining in an employer-sponsored cafeteria or dining out of the office. 
A) A taxpayer lives rent-free at the property she manages even though the owner does not require the manager to live on site. 
B) A headmaster at a boarding school is required to be on campus all night. 
C) A president of a major film studio receives a cash allowance to live in Beverly Hills. 
D) An employee has an option of dining in an employer-sponsored cafeteria or dining out of the office.

Question 12

Jim,a single individual,was unemployed for a few months during 2013.During the year,he received
$3,600 in unemployment compensation payments.How much of his unemployment compensation payments must be included in gross income?

Accepted Answer

$3,600.Unemployment

Question 13

Jack is a lawyer and Jeri is a child psychologist.Jack prepares Jeri's estate planning at no charge and Jeri agrees to counsel Jack's daughter six times at no charge in return for the estate planning.The value of the estate planning is $1,000 and the value of the therapy sessions is $1,000.
a.How much income does Jack have? Why?
b.How much income does Jeri have? Why?

Accepted Answer

a.$1,000.Taxable income includes "all in

Question 14

Marco and his family are covered by his company's health insurance plan.The health insurance costs his company $2,500 a year.During the year,Marco's daughter is diagnosed with a serious illness and the health insurance pays $25,000 for treatment.How much of the insurance and treatment costs are taxable to Marco?

Accepted Answer

None of the cost of the family

Question 15

In 2013,Uriah received the following interest payments: Interest of $400 on an overpayment of 2012 Federal income taxes Interest of $300 from his bank certificate of deposit.
Interest of $1,500 on municipal bonds
Interest of $1,000 on United States savings bonds Series HH)
What amount,if any,should Uriah report as taxable interest income on his 2013 individual income tax return?

Accepted Answer

A) $0 
B) $700 
C) $1,700 
D) $3,200 
E) None of the above 
A) $0 
B) $700 
C) $1,700 
D) $3,200 
E) None of the above

Question 16

Interest earned on bonds issued by a state government is fully taxable.

Accepted Answer

A) True 
 B)False

Question 17

Barry has a successful methamphetamine laboratory.Producing methamphetamine is illegal under federal law.Is Barry required by law to report the income from his lab on his tax return? Why?

Accepted Answer

Yes.Illegal income is still ta

Question 18

Which of the following amounts must be included in the gross income of the recipient?

Accepted Answer

A) Child support payments 
B) Welfare payments 
C) Gifts 
D) Royalties 
E) All of the above are included in gross income 
A) Child support payments 
B) Welfare payments 
C) Gifts 
D) Royalties 
E) All of the above are included in gross income

Question 19

To pay for college,Henry received the following: $1,000 scholarship from the Thespian Club to pay for books
$5,000 scholarship from the Elks Lodge for tuition
$4,000 worth of room and board as a dorm supervisor through a work-study program
How much must Henry claim 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 20

Rob is 8 years old and won a sports car valued at $30,000 in a drawing at Disneyland.How much income,if any,must Rob report on his 2013 tax return? Why?

Accepted Answer

$30,000.Prizes are t

Amounts received as scholarships for books and tuition may be excluded from the recipient's taxable income.

Payments made by an employer for health insurance on behalf of an employee are considered income to the employee at the time the payments are made.

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

In some cases,Social Security benefits may be partially taxable.

Which of the following is excluded from gross income?

A scholarship for room and board granted in 2013 is fully taxable to the recipient.

In June of 2013,a wealthy aunt gave Janie a stock portfolio worth $150,000.During the year,she collects $4,000 in dividends.How much of these amounts,if any,should Janie include in gross income for 2013? Why?

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

In which of the following cases may the employee exclude the meals and/or lodging:

Jim,a single individual,was unemployed for a few months during 2013.During the year,he received $3,600 in unemployment compensation payments.How much of his unemployment compensation payments must be included in gross income?

Interest earned on bonds issued by a state government is fully taxable.

Barry has a successful methamphetamine laboratory.Producing methamphetamine is illegal under federal law.Is Barry required by law to report the income from his lab on his tax return? Why?

Which of the following amounts must be included in the gross income of the recipient?

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

Rob is 8 years old and won a sports car valued at $30,000 in a drawing at Disneyland.How much income,if any,must Rob report on his 2013 tax return? Why?

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

Amounts received as scholarships for books and tuition may be excluded from the recipient's taxable income.

Payments made by an employer for health insurance on behalf of an employee are considered income to the employee at the time the payments are made.

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

In some cases,Social Security benefits may be partially taxable.

Which of the following is excluded from gross income?

A scholarship for room and board granted in 2013 is fully taxable to the recipient.

In June of 2013,a wealthy aunt gave Janie a stock portfolio worth $150,000.During the year,she collects $4,000 in dividends.How much of these amounts,if any,should Janie include in gross income for 2013? Why?

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

In which of the following cases may the employee exclude the meals and/or lodging:

Jim,a single individual,was unemployed for a few months during 2013.During the year,he received $3,600 in unemployment compensation payments.How much of his unemployment compensation payments must be included in gross income?

Interest earned on bonds issued by a state government is fully taxable.

Barry has a successful methamphetamine laboratory.Producing methamphetamine is illegal under federal law.Is Barry required by law to report the income from his lab on his tax return? Why?

Which of the following amounts must be included in the gross income of the recipient?

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

Rob is 8 years old and won a sports car valued at $30,000 in a drawing at Disneyland.How much income,if any,must Rob report on his 2013 tax return? Why?

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