Question 1

One of the requirements that must be met in order to defer recognition of income for advance payments for goods is

Accepted Answer

A) the taxpayer's method of accounting for the sale for tax purposes is the same as the method used for financial reporting purposes. 
B) the goods are on the taxpayer's premises on the last day of the tax year. 
C) the goods are produced in the United States. 
D) the amount received is more than the taxpayer's cost of the goods. 
A) the taxpayer's method of accounting for the sale for tax purposes is the same as the method used for financial reporting purposes. 
B) the goods are on the taxpayer's premises on the last day of the tax year. 
C) the goods are produced in the United States. 
D) the amount received is more than the taxpayer's cost of the goods.

Question 2

With respect to property settlements in a divorce or separation,all of the following are true with the exception of

Accepted Answer

A) a property settlement does not result in income to either spouse. 
B) no tax deduction is allowed for payment of a property settlement. 
C) the spouse receiving a property settlement has a basis equal to the basis of that property to the paying spouse prior to payment. 
D) All of the above statements are correct. 
A) a property settlement does not result in income to either spouse. 
B) no tax deduction is allowed for payment of a property settlement. 
C) the spouse receiving a property settlement has a basis equal to the basis of that property to the paying spouse prior to payment. 
D) All of the above statements are correct.

Question 3

Ellen,a CPA,prepares a tax return for Frank,a plumber,in exchange for installing a new sink.Since no cash changed hands,neither taxpayer is required to report any income.

Accepted Answer

A) True 
 B)False

Question 4

Under the economist's definition,unrealized gains,as well as gifts and inheritances,are income.

Accepted Answer

A) True 
 B)False

Question 5

In community property states,income is generally taxed to the spouse who earned it.

Accepted Answer

A) True 
 B)False

Question 6

Sheryl is a single taxpayer with a taxable pension of $200,000,taxable interest and dividends of $600,000,capital gains of $400,000 and Social Security benefits of $30,000.What is the amount of her taxable Social Security benefits?

Accepted Answer

A) $0 
B) $30,000 
C) $25,500 
D) $15,000 
A) $0 
B) $30,000 
C) $25,500 
D) $15,000

Question 7

A couple will be getting divorced in 2019,resulting in the payment of alimony.Alimony paid in 2019 will be

Accepted Answer

A) deductible by both the payor and the payee. 
B) deductible by the payor and included in income by the payee. 
C) included in income by the payor and deducted by the payee. 
D) an item which does not affect the payor's or the payee's tax reporting. 
A) deductible by both the payor and the payee. 
B) deductible by the payor and included in income by the payee. 
C) included in income by the payor and deducted by the payee. 
D) an item which does not affect the payor's or the payee's tax reporting.

Question 8

Qualified dividends received by individuals are taxed at the same rate as ordinary income.

Accepted Answer

A) True 
 B)False

Question 9

The cash receipts and disbursements method of accounting is used by most individual taxpayers and most noncorporate businesses that do not have inventories.

Accepted Answer

A) True 
 B)False

Question 10

In December of this year,Jake and Stockard,a married couple,redeemed qualified Series EE U.S.Savings Bonds.The proceeds were used to help pay for their daughter's college tuition.Jake and Stockard received proceeds of $8,000 representing principal of $5,000 and interest of $3,000.The qualified higher educational expenses they paid this year totaled $6,000.Their AGI is below the threshold for phase-out of the exclusion.What is the amount of interest income Jake and Stockard can exclude from their income this year?

Accepted Answer

A) $2,250 
B) $2,500 
C) $3,000 
D) $5,000 
A) $2,250 
B) $2,500 
C) $3,000 
D) $5,000

Question 11

Mark purchased 2,000 shares of Darcy Corporation for $13,200.This year,Darcy declared a 10% nontaxable stock dividend,and Mark received 200 shares.After the dividend Mark's per share basis will be

Accepted Answer

A) $6.00. 
B) $6.57. 
C) $6.60. 
D) $7.26. 
A) $6.00. 
B) $6.57. 
C) $6.60. 
D) $7.26.

Question 12

A taxpayer had the following income and losses in the current year: $$\begin{array} { | l | r| } 
\hline \text { Salary } & \$ 55,000 \
\hline \text { Sold AT\&T stock at a loss } & ( 5,000 ) \
\hline \text { Lottery prize } & 4,500 \
\hline \text { Gambling winnings } & 8,000 \
\hline \text { Gambling losses } & ( 5,000 ) \
\hline
\end{array}$$ What is the taxpayer's adjusted gross income?

Accepted Answer

A) $57,500 
B) $59,500 
C) $62,500 
D) $64,500 
A) $57,500 
B) $59,500 
C) $62,500 
D) $64,500

Question 13

Tom and Heidi,husband and wife,file separate returns.Tom and Heidi live in a common law state.Tom's salary is $82,000 and Heidi's salary is $80,000.Heidi receives dividend income of $7,000 from stock inherited from her parents.Tom receives interest income of $5,000 from bonds purchased with his salary after marriage.Tom and Heidi receive $12,000 dividend income from stock they purchased jointly.Tom's income would be

Accepted Answer

A) $92,000. 
B) $93,000. 
C) $94,000. 
D) $96,500. 
A) $92,000. 
B) $93,000. 
C) $94,000. 
D) $96,500.

Question 14

Becky wins a car and furniture on a television game show.The fair market value of these items is taxable to Becky.

Accepted Answer

A) True 
 B)False

Question 15

Alimony received under the terms of a divorce agreement entered into in 2018 is taxable to the recipient while child support payments are not.

Accepted Answer

A) True 
 B)False

Question 16

David,age 62,retires and receives $1,000 per month annuity from his employer's qualified pension plan.David made $65,000 of after-tax contributions to the plan prior to his retirement.Under the simplified method,David's number of anticipated payments is 260.What is the amount includible in income in the first year of withdrawals assuming 12 monthly payments?

Accepted Answer

A) $2,600 
B) $3,000 
C) $9,000 
D) $12,000 
A) $2,600 
B) $3,000 
C) $9,000 
D) $12,000

Question 17

Internal Revenue Code Section 61 provides an inclusive list of all possible items taxed under the Code.

Accepted Answer

A) True 
 B)False

Question 18

With some exceptions,amounts withdrawn from a pension plan prior to the normal starting date are subject to a ten percent nondeductible penalty.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is not included in gross income when received?

Accepted Answer

A) interest received on bank accounts 
B) royalties paid to an author 
C) amounts received to cancel or modify a lease 
D) refundable security deposit 
A) interest received on bank accounts 
B) royalties paid to an author 
C) amounts received to cancel or modify a lease 
D) refundable security deposit

Question 20

Property settlements made incident to a divorce have no immediate tax consequences; that is,the transfer from one spouse to another is not taxable.

Accepted Answer

A) True 
 B)False

Exam 19: Gross Income: Inclusions

One of the requirements that must be met in order to defer recognition of income for advance payments for goods is

With respect to property settlements in a divorce or separation,all of the following are true with the exception of

Ellen,a CPA,prepares a tax return for Frank,a plumber,in exchange for installing a new sink.Since no cash changed hands,neither taxpayer is required to report any income.

Under the economist's definition,unrealized gains,as well as gifts and inheritances,are income.

In community property states,income is generally taxed to the spouse who earned it.

Sheryl is a single taxpayer with a taxable pension of $200,000,taxable interest and dividends of $600,000,capital gains of $400,000 and Social Security benefits of $30,000.What is the amount of her taxable Social Security benefits?

A couple will be getting divorced in 2019,resulting in the payment of alimony.Alimony paid in 2019 will be

Qualified dividends received by individuals are taxed at the same rate as ordinary income.

The cash receipts and disbursements method of accounting is used by most individual taxpayers and most noncorporate businesses that do not have inventories.

Mark purchased 2,000 shares of Darcy Corporation for $13,200.This year,Darcy declared a 10% nontaxable stock dividend,and Mark received 200 shares.After the dividend Mark's per share basis will be

A taxpayer had the following income and losses in the current year: Salary \ 55,000 Sold AT\&T stock at a loss (5,000) Lottery prize 4,500 Gambling winnings 8,000 Gambling losses (5,000) What is the taxpayer's adjusted gross income?

Becky wins a car and furniture on a television game show.The fair market value of these items is taxable to Becky.

Alimony received under the terms of a divorce agreement entered into in 2018 is taxable to the recipient while child support payments are not.

Internal Revenue Code Section 61 provides an inclusive list of all possible items taxed under the Code.

With some exceptions,amounts withdrawn from a pension plan prior to the normal starting date are subject to a ten percent nondeductible penalty.

Which of the following is not included in gross income when received?

Property settlements made incident to a divorce have no immediate tax consequences; that is,the transfer from one spouse to another is not taxable.

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

S Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

U.S. Taxation of Foreign-Related Transactions

an Introduction to Taxation

Determination of Tax

Gross Income: Exclusions

Property Transactions: Capital Gains and Losses

Deductions and Losses

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Losses and Bad Debts

Depreciation,cost Recovery,amortization,and Depletion

Accounting Periods and Methods

Property Transactions: Nontaxable Exchanges

Property Transactions: Sec1231 and Recapture

Special Tax Computation Methods,tax Credits,and Payment of Tax

Tax Research

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