Question 1

Recognized income may be in the form of cash or property received (but not services received).

Accepted Answer

A) True 
 B)False

Question 2

Generally, long-term capital gains are taxed at:

Accepted Answer

A) 0 percent. 
B) 10 percent. 
C) 15 percent. 
D) 20 percent. 
E) Depending on the taxpayer's income, 0 percent, 15 percent, or 20 percent. 
A) 0 percent. 
B) 10 percent. 
C) 15 percent. 
D) 20 percent. 
E) Depending on the taxpayer's income, 0 percent, 15 percent, or 20 percent.

Question 3

When an employer matches an employee's contribution to the employee's 401(k)account, the employee is immediately taxed on the amount of the employer's matching contribution.

Accepted Answer

A) True 
 B)False

Question 4

Simon was awarded a scholarship to attend State Law School from Gary Harris & Associates, Attorneys at Law.The scholarship pays Simon's tuition ($7,000 per semester), fees ($500 per semester), and a $4,500 per-semester stipend to pay for food and housing.In order to qualify for the stipend, Simon must work 10 hours per week at Gary Harris & Associates during the term.How much of the scholarship is Simon required to include in gross income?

Accepted Answer

$12,000 per semester.
The enti

Question 5

Bad Brad received 20 NQOs (each option gives him the right to purchase 30 shares of stock for $10 per share)from his employer.At the time he started working the stock price was $11 per share.Now that the share price is $25 per share, he exercises all of the options.Two years later Bad Brad sells the stock for $27 per share.What is Bad Brad's basis in his stock for purposes of calculating the gain or loss?

Accepted Answer

A) $6,000. 
B) $9,000. 
C) $15,000. 
D) $16,200. 
A) $6,000. 
B) $9,000. 
C) $15,000. 
D) $16,200.

Question 6

Janine's employer loaned her $5,000 this year (interest-free)to buy a used car.If the federal interest rate was 4 percent, which of the following is correct?

Accepted Answer

A) Janine recognizes $200 of taxable interest income. 
B) Janine's employer recognizes $200 of deductible interest expense. 
C) Janine recognizes $200 of imputed compensation income. 
D) Janine recognizes $200 of imputed dividend income. 
E) None of the choices are correct. 
A) Janine recognizes $200 of taxable interest income. 
B) Janine's employer recognizes $200 of deductible interest expense. 
C) Janine recognizes $200 of imputed compensation income. 
D) Janine recognizes $200 of imputed dividend income. 
E) None of the choices are correct.

Question 7

Which of the following statements about alimony payments is true for divorce agreements executed before 2019?

Accepted Answer

A) To qualify as alimony, payments must be made in cash. 
B) Alimony payments are includible in the gross income of the recipient. 
C) To qualify as alimony, payments cannot continue after the death of the recipient. 
D) To qualify as alimony, payments must be made under a written agreement or divorce decree that does not designate the payments as "nonalimony" or child support. 
E) All of these choices are correct. 
A) To qualify as alimony, payments must be made in cash. 
B) Alimony payments are includible in the gross income of the recipient. 
C) To qualify as alimony, payments cannot continue after the death of the recipient. 
D) To qualify as alimony, payments must be made under a written agreement or divorce decree that does not designate the payments as "nonalimony" or child support. 
E) All of these choices are correct.

Question 8

Ethan competed in the annual Austin Marathon this year and won a $25,000 prize for fastest wheelchair entrant.Ethan indicated that he would transfer the prize to the local hospital.How much of the prize should Ethan include in his gross income?

Accepted Answer

A) $25,000 
B) $25,000 because all prizes are taxable 
C) Zero because prizes transferred to charities are excludable 
D) Zero because all prizes are excludable 
E) Zero because prizes from charities are excludable 
A) $25,000 
B) $25,000 because all prizes are taxable 
C) Zero because prizes transferred to charities are excludable 
D) Zero because all prizes are excludable 
E) Zero because prizes from charities are excludable

Question 9

Karl works at Moe's Grocery.This year Karl was paid $43,000 in salary but he was allowed to purchase his groceries at 10 percent below Moe's cost.This year Karl spent $3,600 to purchase groceries costing Moe $4,000 and worth $6,000.What amount must Karl include in his gross income?

Accepted Answer

A) $46,600 
B) $47,000 
C) $49,000 
D) $43,400 
E) $45,500 
A) $46,600 
B) $47,000 
C) $49,000 
D) $43,400 
E) $45,500

Question 10

Which of the following best describes distributions from a defined benefit plan?

Accepted Answer

A) Distributions from defined benefit plans are fully taxable as ordinary income. 
B) Distributions from defined benefit plans are partially taxable as ordinary income and partially nontaxable as a return of capital. 
C) Distributions from defined benefit plans are fully taxable as capital gains. 
D) Distributions from defined benefit plans are partially taxable as capital gains and partially nontaxable as a return of capital. 
A) Distributions from defined benefit plans are fully taxable as ordinary income. 
B) Distributions from defined benefit plans are partially taxable as ordinary income and partially nontaxable as a return of capital. 
C) Distributions from defined benefit plans are fully taxable as capital gains. 
D) Distributions from defined benefit plans are partially taxable as capital gains and partially nontaxable as a return of capital.

Question 11

Samantha was ill for four months this year.Samantha missed work during this period, but disability insurance paid $18,000 of disability pay to replace her missed salary.Samantha shares the cost of the insurance with her employer.This year Samantha's employer paid $2,200 in disability premiums for Samantha as a nontaxable fringe benefit and Samantha paid the remaining $1,100 of premiums from her salary.What amount of the disability pay must Samantha include in her gross income (Round final answer to the nearest whole dollar)?

Accepted Answer

A) $18,000 
B) $12,000 
C) $7,000 
D) $1,100 
E) Zero-none of the disability pay is included in gross income 
A) $18,000 
B) $12,000 
C) $7,000 
D) $1,100 
E) Zero-none of the disability pay is included in gross income

Question 12

A below-market loan (e.g., from an employer to an employee)is a common example of a transaction that generates taxable imputed income.

Accepted Answer

A) True 
 B)False

Question 13

A taxpayer who borrows money will include the amount borrowed in their gross income under the all-inclusive definition of income.

Accepted Answer

A) True 
 B)False

Question 14

Brenda has $15,000 in U.S.Series EE savings bonds and she is considering whether to cash the bonds.Under what conditions can Brenda exclude the interest on the savings bonds from her gross income?

Accepted Answer

A) Brenda can exclude the interest if she uses the proceeds to pay for college tuition. 
B) Brenda's modified AGI must be below a phase-out range for the exclusion. 
C) The proceeds must be used for higher education expenses of Brenda, her spouse, or Brenda's dependent. 
D) All of these are necessary conditions for Brenda to exclude the interest. 
E) None of these are correct-the interest is always included in gross income. 
A) Brenda can exclude the interest if she uses the proceeds to pay for college tuition. 
B) Brenda's modified AGI must be below a phase-out range for the exclusion. 
C) The proceeds must be used for higher education expenses of Brenda, her spouse, or Brenda's dependent. 
D) All of these are necessary conditions for Brenda to exclude the interest. 
E) None of these are correct-the interest is always included in gross income.

Question 15

The date on which stock options are given to the employee is called the exercise date.

Accepted Answer

A) True 
 B)False

Question 16

Cyrus is a cash-method taxpayer who reports on a calendar-year basis.Last year Cyrus received salary of $88,000 and at year-end his employer announced that Cyrus would receive an additional year-end bonus of $10,000 in cash and a new TV worth $2,000.Cyrus didn't receive his bonus check until January of this year and the TV didn't arrive until March of this year.Determine the amount Cyrus should include in his gross income for last year.

Accepted Answer

$88,000.
Under constructive re

Question 17

When a carpenter provides $100 of services in exchange for $100 of groceries, the carpenter has realized $100 of income.

Accepted Answer

A) True 
 B)False

Question 18

The assignment of income doctrine requires that to shift taxable income from property to another person, the taxpayer must transfer only the income to the other person.

Accepted Answer

A) True 
 B)False

Question 19

Alex is 63 years old and retired.This year Alex won $212,200 in the state lottery.Alex also received $20,000 from an annuity he purchased eight years ago.He purchased the annuity, to be paid annually for 15 years, for $157,500.Alex received $10,000 in Social Security benefits for the year.Calculate Alex's gross income.

Accepted Answer

$230,200 = $212,200 + $9,500 + $8,500.
T

Question 20

Robert will be working overseas on a permanent assignment for an international company beginning on March 1 of this year (306 days this year).His salary is $11,000 per month while Robert is overseas, but only $9,200 per month otherwise.What is the minimum amount of Robert's salary that he must include in gross income this year? (Round your final answer to the nearest whole dollar amount and assume that there are 365 days in this year.)

Accepted Answer

$39,618.
The maximum foreign-earned inco

Recognized income may be in the form of cash or property received (but not services received).

Generally, long-term capital gains are taxed at:

When an employer matches an employee's contribution to the employee's 401(k)account, the employee is immediately taxed on the amount of the employer's matching contribution.

Janine's employer loaned her $5,000 this year (interest-free)to buy a used car.If the federal interest rate was 4 percent, which of the following is correct?

Which of the following statements about alimony payments is true for divorce agreements executed before 2019?

Ethan competed in the annual Austin Marathon this year and won a $25,000 prize for fastest wheelchair entrant.Ethan indicated that he would transfer the prize to the local hospital.How much of the prize should Ethan include in his gross income?

Karl works at Moe's Grocery.This year Karl was paid $43,000 in salary but he was allowed to purchase his groceries at 10 percent below Moe's cost.This year Karl spent $3,600 to purchase groceries costing Moe $4,000 and worth $6,000.What amount must Karl include in his gross income?

Which of the following best describes distributions from a defined benefit plan?

A below-market loan (e.g., from an employer to an employee)is a common example of a transaction that generates taxable imputed income.

A taxpayer who borrows money will include the amount borrowed in their gross income under the all-inclusive definition of income.

Brenda has $15,000 in U.S.Series EE savings bonds and she is considering whether to cash the bonds.Under what conditions can Brenda exclude the interest on the savings bonds from her gross income?

The date on which stock options are given to the employee is called the exercise date.

When a carpenter provides $100 of services in exchange for $100 of groceries, the carpenter has realized $100 of income.

The assignment of income doctrine requires that to shift taxable income from property to another person, the taxpayer must transfer only the income to the other person.

An Introduction to Tax

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Dependents, and Filing Status

Individual for Agi Deductions

Individual From Agi Deductions

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Entities Overview

Corporate Formations and Operations

Corporate Nonliquidating and Liquidating Distributions

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

Filters

Exam 5: Gross Income and Exclusions

Recognized income may be in the form of cash or property received (but not services received).

Generally, long-term capital gains are taxed at:

When an employer matches an employee's contribution to the employee's 401(k)account, the employee is immediately taxed on the amount of the employer's matching contribution.

Janine's employer loaned her $5,000 this year (interest-free)to buy a used car.If the federal interest rate was 4 percent, which of the following is correct?

Which of the following statements about alimony payments is true for divorce agreements executed before 2019?

Ethan competed in the annual Austin Marathon this year and won a $25,000 prize for fastest wheelchair entrant.Ethan indicated that he would transfer the prize to the local hospital.How much of the prize should Ethan include in his gross income?

Karl works at Moe's Grocery.This year Karl was paid $43,000 in salary but he was allowed to purchase his groceries at 10 percent below Moe's cost.This year Karl spent $3,600 to purchase groceries costing Moe $4,000 and worth $6,000.What amount must Karl include in his gross income?

Which of the following best describes distributions from a defined benefit plan?

A below-market loan (e.g., from an employer to an employee)is a common example of a transaction that generates taxable imputed income.

A taxpayer who borrows money will include the amount borrowed in their gross income under the all-inclusive definition of income.

Brenda has $15,000 in U.S.Series EE savings bonds and she is considering whether to cash the bonds.Under what conditions can Brenda exclude the interest on the savings bonds from her gross income?

The date on which stock options are given to the employee is called the exercise date.

When a carpenter provides $100 of services in exchange for $100 of groceries, the carpenter has realized $100 of income.

The assignment of income doctrine requires that to shift taxable income from property to another person, the taxpayer must transfer only the income to the other person.

An Introduction to Tax

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Dependents, and Filing Status

Individual for Agi Deductions

Individual From Agi Deductions

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Entities Overview

Corporate Formations and Operations

Corporate Nonliquidating and Liquidating Distributions

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

Filters