Exam 19: Gross Income: Inclusions

Julia owns 1,000 shares of Orange Corporation.This year,Orange declared a 10% stock dividend.There was no option for shareholders to receive cash.When Julia received 100 shares of Orange stock,it had a fair market value of $50 a share.How much income does Julia have from the dividend?

For a cash-basis taxpayer,security deposits received on rental property are taxable to the landlord upon receipt.

Bridget owns 200 shares of common stock of Jones Corporation.During the current year,Jones gives its shareholders the choice of receiving cash of $2 per share or one additional share of Jones common stock for each 5 shares of stock owned.The stock has a fair market value of $10 per share.Bridget chooses to take the additional shares of stock.How much income does Bridget have from the stock dividend?

Which one of the following items is not considered gross income for tax purposes?

The term "Social Security benefits" does not include

Carolyn,who earns $400,000,is required to pay John,her ex-husband,$200,000 as part of the property settlement as a result of their divorce agreement which was executed in 2019.In turn,John transfers stock worth $50,000 to Carolyn.What is the amount of Carolyn's adjusted gross income in 2019?

A taxpayer may not avoid responsibility for payment of income taxes by assigning the income to a third party.

Reva is a single taxpayer with a taxable pension of $24,000,tax-exempt interest of $8,000,and Social Security benefits of $10,000.What is the amount of her taxable Social Security benefits?

Jonathon,age 50 and in good health,withdrew $6,000 from his pension plan during the current year.The withdrawal was not eligible for any exception to the 10% penalty.Jonathon had made $40,000 of after-tax contributions to the plan while his employer had contributed $80,000.In addition to relevant income taxes,how much penalty must Jonathon pay?

Distributions in excess of a corporation's current and accumulated earnings and profits are treated as a nontaxable recovery of capital unless they exceed the basis of the stock.

Ellen is a single taxpayer with qualified dividend income of $5,000,and itemized deductions of $13,000. Required: Determine Ellen's taxable income and tax liability in 2019,assuming the following salaries a.$40,000. b.$100,000.

The wherewithal-to-pay concept provides that a tax should be collected when the taxpayer has the financial resources to pay the tax.

The recipient of a taxable stock dividend includes the value of the stock received in gross income and that amount becomes the basis for the stock received.

Ms.Walter,age 70,is thinking about going back to work part-time.She knows that the wages may affect the taxability of her Social Security benefits.What is the maximum percentage of Social Security benefits that could become taxable?

Earnings of a minor child are taxed to the child regardless of the state's property law system.

Under the accrual method of accounting,income is considered earned when all the events have occurred which fix the right to receive the income and when the amount of income can be determined with reasonable accuracy.

Gregory receives 100 shares of stock from his employer as a year-end bonus.The fair market value of the stock should be included in Gregory's income for the year.

Carla redeemed EE bonds which qualify for the educational exclusion.The redemption consisted of $14,000 principal and $6,000 interest.The net qualifying educational expenses are $10,000.Her AGI is below the threshold for phase-out of the exclusion.The taxable interest is

Frasier and Marcella,husband and wife,file separate returns.Frasier and Marcella live in a community property state that considers separate property income to be separate.Frasier's salary is $42,000 and Marcella's salary is $46,000.Marcella receives dividend income of $4,000 from stock inherited from her parents.Frasier receives interest income of $1,000 from bonds purchased with his salary after marriage.Frasier and Marcella receive $3,200 dividend income from stock they purchased jointly.Marcella's income would be

Natasha is a single taxpayer with $100,000 of taxable income.Included in the taxable income is distributions of earnings this year as follows: CE Corp., a C corporation \ 1,000 SE Corp., an S corporation \ 2,000 Paris Corp., a foreign corporation \ 3,000 How much of the $6,000 distribution will be taxed at the 15% tax rate?