Question 1

Interest income is taxed in the year in which it is received by the taxpayer or credited to the bank account.

Accepted Answer

A) True 
 B)False

Question 2

This fall Angelina,age 35,plans to attend college.To fund her tuition she cashed in Series EE savings bonds with a redemption value of $24,000 and an original cost of $16,800.Angelina plans on spending $7,200 of the proceeds to pay tuition.The redemption proceeds are Angelina's only source of income.What amount of interest must Angelina include in gross income this year?

Accepted Answer

$5,040 Angelina has realized interest of

Question 3

Bernie is a former executive who is retired.This year Bernie received $250,000 in pension payments and $10,000 of Social Security payments.What amount must Bernie include in his gross income?

Accepted Answer

A) $250,000 
B) $255,000 
C) $258,500 
D) $260,000 
E) $0 
A) $250,000 
B) $255,000 
C) $258,500 
D) $260,000 
E) $0

Question 4

Shaun is a student who has received an academic scholarship to State University.The scholarship paid $14,000 for tuition,$2,500 for fees,and $1,000 for books.In addition,Shaun's dormitory fees of $8,500 were paid by the university when he agreed to counsel freshman on campus living.What amount must Shaun include in his gross income?

Accepted Answer

A) $9,500 
B) $11,000 
C) $2,500 
D) $8,500 
E) $0-none of these benefits are included in gross income. 
A) $9,500 
B) $11,000 
C) $2,500 
D) $8,500 
E) $0-none of these benefits are included in gross income.

Question 5

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 6

For tax purposes,unearned income is income that has not yet been realized.

Accepted Answer

A) True 
 B)False

Question 7

Interest earned on a city of Denver bond is excluded from gross income (for federal tax purposes).

Accepted Answer

A) True 
 B)False

Question 8

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 the 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 the choices are correct.

Question 9

Workers' compensation benefits are excluded from gross income.

Accepted Answer

A) True 
 B)False

Question 10

Wendell is an executive with CFO Tires.At the beginning of this year the corporation loaned Wendell $50,000 at an interest rate of 1 percent.Wendell would have paid interest of $2,500 this year if the interest rate on the loan had been set at the prevailing federal interest rate.Wendell used the funds as a down payment on a vacation home,and during the year he paid $500 of interest to CFO.On December 31,CFO forgave the loan and remaining interest.What amount of gross income does Wendell recognize from the loan this year?

Accepted Answer

$52,000 Wendell must include $2,000 in g

Interest income is taxed in the year in which it is received by the taxpayer or credited to the bank account.

Bernie is a former executive who is retired.This year Bernie received $250,000 in pension payments and $10,000 of Social Security payments.What amount must Bernie include in his gross income?

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?

For tax purposes,unearned income is income that has not yet been realized.

Interest earned on a city of Denver bond is excluded from gross income (for federal tax purposes).

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

Workers' compensation benefits are excluded from gross income.

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 Deductions

Investments

Individual Income Tax Computation and Tax Credits

Business Income,deductions,and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation,reorganization,and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The Ustaxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters

Exam 5: Gross Income and Exclusions

Interest income is taxed in the year in which it is received by the taxpayer or credited to the bank account.

Bernie is a former executive who is retired.This year Bernie received $250,000 in pension payments and $10,000 of Social Security payments.What amount must Bernie include in his gross income?

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?

For tax purposes,unearned income is income that has not yet been realized.

Interest earned on a city of Denver bond is excluded from gross income (for federal tax purposes).

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

Workers' compensation benefits are excluded from gross income.

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 Deductions

Investments

Individual Income Tax Computation and Tax Credits

Business Income,deductions,and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation,reorganization,and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The Ustaxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters