Exam 20: Gross Income: Exclusions

Over the years Rianna paid $65,000 in premiums on a life insurance policy with a face value of $100,000.Upon reaching 65,while still in good health,Rianna surrendered the policy and collected $95,000.In the year of collection,Rianna will report

Kelly was sent by her employer to work on a special assignment in Paris for six months.Kelly will be able to exclude some of her income earned in Paris.

All of the following items are excluded from gross income except

Healthwise Ambulance requires its employees to be on 24-hour call and consequently gives them $800 per month housing allowance and a $200 per month food allowance.Ron,an employee of Healthwise,receives a salary of $40,000 per year (this does not include the allowances).Ron will be taxed each year on

Sam received a scholarship for room and board.This scholarship is excludible from income.

Which one of the following fringe benefits allows for discrimination between highly compensated employees and other employees to be present?

A taxpayer may avoid tax on income by having the payment made to another taxpayer.

Hope receives an $18,500 scholarship from State University.The university specifies that $8,500 is for tuition,books,supplies,and equipment,while $10,000 is for room and board.In addition,Hope works part-time at the campus library and earns $5,000.Hope's gross income is

Fatima's employer funds child care for all employees' children.She pays nothing for this service.The cost of Fatima's child care is $7,200 a year.How much of the child care benefits are taxable to Fatima?

Joe Black,a police officer,was injured in the line of duty.He received the following during the current year: Salary \ 50,000 Workers' compensation 5,000 Compensatory damages for physical injury 18,00 Punitive damages for physical injury 14,000 Cash reward for preventing a break-in 2,000 What is the amount that is taxable?

Amounts withdrawn from qualified tuition plans are tax-free if the amounts are used for qualified higher education expenses including tuition,fees,books,and room and board for students attending on at least a half-time basis.

Which of the following is not excluded from income?

All of the following are requirements for excluding employee achievement awards except for

Julia suffered a severe stroke and has been admitted to a private hospital where she is expected to remain for the rest of her life.She is certified by a licensed health care practitioner as being a "chronically ill individual." Her hospital expenses amount to $350 per day.She will receive $340 per day from a $500,000 life insurance policy as an accelerated death benefit.In 2019,she was in the hospital for 10 days and received $3,400.How much of this amount is taxable?

Felice is in the hotel management field.She rents an apartment near the hotel so she can walk to work.She pays $1,000 per month for rent.Felice has just been offered a similar position at a different hotel.The salary will be $14,000 lower,but they do require she live in the hotel to be on call and provide her with a suite to live in.Felice has a marginal tax rate of 32%.She will be financially ahead by accepting the new position.

"No additional cost" benefits are excluded from an employee's gross income if the services are the same type that are sold to customers and in the line of business in which the employee works.

The discharge of certain student loans is excluded from income if all of the following are present except for

Linda was injured in an automobile accident caused by another driver.Her son,Matthew,was in the automobile but not physically injured.The other driver's insurance company was required by a court to pay Linda $75,000 to cover medical bills relating to her injuries,$30,000 to compensate her for emotional distress attributable to the injuries and $40,000 of punitive damages.Matthew was paid $15,000 to compensate him for emotional distress attributable to his witnessing his mother's injuries.What is the amount taxable to Linda?

Miranda is not a key employee of AB Corporation.AB provides Miranda with group term life insurance coverage of $140,000.The premiums attributable to the excess coverage are $1,300.The uniform one-month group-term premium is one dollar per $1,000 of coverage.How much must Miranda include in income?

Which of the following items will result in an increase in gross income?