Exam 2: Gross Income and Exclusions

Phillip, a single parent, would like to contribute $1,800 to a Coverdell educational savings account for his 10-year-old son. His AGI is $98,000. Calculate the amount of the contribution he can make.

Laura and Leon were granted a divorce in 2019. In accordance with the decree, Leon made the following payments to Laura in 2019: Child support payments contingent on the age of the child Annual cash payments, other than child support, specified as alimony in the divorce agreement How much should Laura include in her 2019 taxable income as alimony?

Under a divorce agreement executed in 2014, Bob is required to pay his ex-wife, Carol, $3,000 a month until their youngest daughter is 21 years of age. At that time, the required payments are reduced to $2,000 per month. a.How much of each $3,000 payment may be deducted as alimony by Bob? b.How much of each $3,000 payment must be included in Carol's taxable income?

Tim, a single taxpayer, receives $500 of qualified dividends from Exxon in the current year. His taxable income before the dividends is $26,000. Tim's tax on the dividends will be:

Amounts received by an employee as reimbursement for medical expenses under a policy provided by the taxpayer's employer are excluded from gross income.

In June of the current year, a wealthy aunt gave Janie a stock portfolio worth $150,000. During the year, she collects $4,000 in dividends. How much of these amounts, if any, should Janie include in gross income for the current year? Why?

All of the following amounts are excluded from gross income, except:

Marco and his family are covered by his company's health insurance plan. The health insurance costs his company $8,500 a year. During the year, Marco's daughter is diagnosed with a serious illness and the health insurance pays $25,000 for treatment. How much of the insurance and treatment costs are taxable to Marco?

During the tax year, Thomas and Yolanda received $24,000 in Social Security benefits. The amount of their adjusted gross income for the year was $2,000 and they received no tax-exempt interest income. Calculate the amount of the Social Security benefits that Thomas and Yolanda must include in their gross income for the year.

All of the following amounts are taxable income to the recipient except:

As part of the property settlement related to their 2019 divorce, Stella must give Peter the house that they have been living in, while she gets 100 percent of their savings accounts. The house was purchased in Texas 15 years ago for $100,000 and is now worth $110,000. How much gain must Stella recognize on the transfer of the house to Peter? What is Peter's tax basis in the house for calculating any future sale of the house?

Tim receives a $25,000 gift from his parents for a down payment on a house. They know he cannot buy a house without their help. They write "gift" in the memo line of the check. How much of the gift is taxable to Tim?

Laura and Leon were granted a divorce in 2008. In accordance with the decree, Leon made the following payments to Laura in 2019: Child support payments contingent on the age of the child $\quad \$ 6,000$ Indefinite periodic payments terminating on Laura's death $\quad \$ 4,000$ How much of the payments can he deduct as alimony in 2019?

Toby transfers to Jim a life insurance policy with a face value of $25,000 and a cash value of $5,000 in payment of a personal debt. Jim continues to make premium payments on the policy until Toby's death. At that time, Jim had paid $1,500 in premiums. a.How much income must Jim report when he receives the $25,000 in proceeds? b.Would your answer be different if Toby and Jim were partners in a partnership? Why?

Group term life insurance premiums paid by an employer for insurance amounts less than $50,000 must be included in the employee's income.

Andy landscaped his friend's house in return for a couch set and an HD television worth $8,000. How much income must Andy report on his tax return for his services?

The amount of excludable employee reimbursement in 2019 for parking and mass transit costs are each $265 per month.

Rachel and Rob are married and living together in California. Their income is: Rob's salary \ 120,000 Rachel's net income from her business 130,000 Interest (Rob's separate property investments) 4,000 Interest (Rachel's separate property investments) 2,000 Dividends (community property) 5,000 Total income is \ 261,000 a. If Rachel files a separate return, how much income should she report? b. If Rob and Rachel live in Texas, what should Rachel report as income?

In the tax law, the definition of gross income is:

A taxpayer in the 32 percent tax bracket invests in a City of San Diego bond paying 8 percent interest. What taxable interest rate would provide the same after-tax return?