Derrick was in an automobile accident while he was going to work.The doctor advised him to stay home for eight months due to his physical injuries.The resulting lawsuit was settled and Derrick received the following amounts: \[\begin{array} { | l | r | } \hline \text { Compensatory damages for physical injury } & \$ 80,000 \\ \hline \text { Punitive damages } & 95,000 \\ \hline \end{array}\] How much of the settlement must Derrick include in ordinary income on his tax return?

A) $0 B) $80,000 C) $95,000 D) $175,000 A) $0 B) $80,000 C) $95,000 D) $175,000

Carl filed his tax return,properly claiming the head of household filing status.Carl's employer paid or provided the following to Carl: \[\begin{array} { | l | r | } \hline \text { Wages } & \$ 65,000 \\ \hline \text { Fair market value of qualified dependent care services } & 4,000 \\ \hline \text { Premiums for } \$ 50,000 \text { qualified group term life insurance } & 500 \\ \hline \text { Medical insurance premiums } & 600 \\ \hline \end{array}\] How much of this income should Carl report (assume benefits are provided on a nondiscriminatory basis)?

A) $65,000 B) $69,000 C) $69,500 D) $70,100 A) $65,000 B) $69,000 C) $69,500 D) $70,100

Exam 20: Gross Income: Exclusions

Amanda,who lost her modeling job,sued her employer for age discrimination.She was awarded $75,000 in lost wages,$25,000 for emotional distress,and $150,000 punitive damages.The amount taxable is

(Multiple Choice)

5.0/5

(76)

Question 21

Michael is an employee of StayHere Hotels,Inc.in Washington,DC.On his vacation,Michael travels to San Francisco and stays at a StayHere Hotel for six nights free of charge.The regular rate for a hotel room at StayHere in San Francisco is $300 a night.His ability to stay in the hotel without charge is based on the availability of empty rooms.How much income must Michael report due to the use of the San Francisco hotel room?

(Multiple Choice)

4.9/5

(79)

Question 22

Rebecca is the beneficiary of a $500,000 insurance policy on her husband's life.She elects to receive $52,000 per year for 10 years rather than receive the entire amount in a lump sum.Of the amount received each year

(Multiple Choice)

4.8/5

(70)

Question 23

A nursing home maintains a cafeteria that is used by employees,patients,and visitors.The value of free meals provided to employees while on duty so that they may be available for emergency calls is not taxable.

(True/False)

4.9/5

(78)

Question 24

Which of the following item(s)must be included in the income of the respective employees?

(Multiple Choice)

4.7/5

(79)

Question 25

Dividends on life insurance policies are generally excludible income because they are considered a return of premium.

(True/False)

5.0/5

(79)

Question 26

Melanie,a U.S.citizen living in Paris,France,for the last three years,earns a salary of $125,000 in 2019.Melanie's housing costs are $24,000 per year,which is reasonable.How much can Melanie exclude from income?

(Multiple Choice)

4.8/5

(72)

Question 27

The value of health,accident,and disability insurance premiums paid by an employer are generally not included in an employee's gross income.

(True/False)

5.0/5

(85)

Question 28

During 2019 a company provides free meals to employees in its facility so that employees are available to help clients throughout the work hours.The employees can exclude the value of the meals eaten,and the company can fully deduct the meals provided to employees.

(True/False)

4.8/5

(68)

Question 29

Derrick was in an automobile accident while he was going to work.The doctor advised him to stay home for eight months due to his physical injuries.The resulting lawsuit was settled and Derrick received the following amounts: Compensatory damages for physical injury \ 80,000 Punitive damages 95,000 How much of the settlement must Derrick include in ordinary income on his tax return?

(Multiple Choice)

4.7/5

(66)

Question 30

Carl filed his tax return,properly claiming the head of household filing status.Carl's employer paid or provided the following to Carl: Wages \ 65,000 Fair market value of qualified dependent care services 4,000 Premiums for \ 50,000 qualified group term life insurance 500 Medical insurance premiums 600 How much of this income should Carl report (assume benefits are provided on a nondiscriminatory basis)?

(Multiple Choice)

5.0/5

(87)

Question 31

Elisa sued her former employer for discrimination.She was awarded $200,000 for lost wages,$30,000 for medical expenses related to emotional distress resulting from the discrimination,and $300,000 in punitive damages.The amount taxable is

(Multiple Choice)

4.8/5

(86)

Question 32

The exclusion for employee discounts on services is limited to 30% of the price charged regular customers.

(True/False)

4.9/5

(67)

Question 33

The amount of cash fringe benefits received under a cafeteria plan is taxable to an employee.

(True/False)

4.9/5

(77)

Question 34

Britney is beneficiary of a $150,000 insurance policy on her father's life.Upon his death,she may elect to receive the proceeds in five yearly installments of $32,000 or may take the $150,000 lump sum.She elects to take the lump sum payment.What are the tax consequences in year one?

(Multiple Choice)

5.0/5

(67)

Question 35

Loan proceeds are taxable in the year received in cash.

(True/False)

4.8/5

(83)

Question 36

Which of the following statements regarding the qualified tuition plans (QTP)is incorrect?

(Multiple Choice)

4.9/5

(84)

Question 37

Accelerated death benefits from a life insurance policy received by a terminally ill person may be excluded from taxable income.

(True/False)

4.7/5

(79)

Question 38

Jillian has just accepted an offer from accounting firm for a full-time position after completion of her master's degree.In addition to paying a high salary and premiums on the basic health insurance policy,the firm will pay the benefits listed below.Which of the following benefits can be excluded (assume the benefits are provided on a non-discriminatory basis to all employees)?

(Multiple Choice)

4.9/5

(77)

Question 39

A business provides $45,000 of group-term life insurance to all workers,including the partners who work in the business.All of the workers can exclude the value of this fringe benefit from their gross income.

(True/False)

4.9/5

(85)

Question 40

Showing 21 - 40 of 109

Exam 20: Gross Income: Exclusions

Amanda,who lost her modeling job,sued her employer for age discrimination.She was awarded $75,000 in lost wages,$25,000 for emotional distress,and $150,000 punitive damages.The amount taxable is

Rebecca is the beneficiary of a $500,000 insurance policy on her husband's life.She elects to receive $52,000 per year for 10 years rather than receive the entire amount in a lump sum.Of the amount received each year

A nursing home maintains a cafeteria that is used by employees,patients,and visitors.The value of free meals provided to employees while on duty so that they may be available for emergency calls is not taxable.

Which of the following item(s)must be included in the income of the respective employees?

Dividends on life insurance policies are generally excludible income because they are considered a return of premium.

Melanie,a U.S.citizen living in Paris,France,for the last three years,earns a salary of $125,000 in 2019.Melanie's housing costs are $24,000 per year,which is reasonable.How much can Melanie exclude from income?

The value of health,accident,and disability insurance premiums paid by an employer are generally not included in an employee's gross income.

During 2019 a company provides free meals to employees in its facility so that employees are available to help clients throughout the work hours.The employees can exclude the value of the meals eaten,and the company can fully deduct the meals provided to employees.

Elisa sued her former employer for discrimination.She was awarded $200,000 for lost wages,$30,000 for medical expenses related to emotional distress resulting from the discrimination,and $300,000 in punitive damages.The amount taxable is

The exclusion for employee discounts on services is limited to 30% of the price charged regular customers.

The amount of cash fringe benefits received under a cafeteria plan is taxable to an employee.

Britney is beneficiary of a $150,000 insurance policy on her father's life.Upon his death,she may elect to receive the proceeds in five yearly installments of $32,000 or may take the $150,000 lump sum.She elects to take the lump sum payment.What are the tax consequences in year one?

Loan proceeds are taxable in the year received in cash.

Which of the following statements regarding the qualified tuition plans (QTP)is incorrect?

Accelerated death benefits from a life insurance policy received by a terminally ill person may be excluded from taxable income.

A business provides $45,000 of group-term life insurance to all workers,including the partners who work in the business.All of the workers can exclude the value of this fringe benefit from their gross income.

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