Question 1

To promote business activity, the tax rules generally are very liberal in treating business gifts as tax-free income to the recipient.

Accepted Answer

A) True 
 B)False

Question 2

Bonnie receives salary income of $32,000, unemployment compensation of $4,400, and interest income of $1,200 and a gift of $7,000 in cash from her aunt. How much gross income does Bonnie have?

Accepted Answer

$37,600 =

Question 3

Marie had a good year. She received the following prizes and awards: - an iPad from The Famous Daytime Talk Show with a fair market value of $500
- lottery winnings of $1,000 received in cash
- a plaque worth $25 plus $100 of Godiva chocolate in recognition for 100 days on the job without an accident
- a $10,000 cash prize from American Idol
How much of her prizes and awards should Marie report on her tax return?

Accepted Answer

A) None, they are all excluded from income 
B) $11,000; only cash prizes and awards are included 
C) $11,500; the award from her job is excluded 
D) $11,600; the plaque may be excluded 
E) $11,625; everything is included at the highest amount 
A) None, they are all excluded from income 
B) $11,000; only cash prizes and awards are included 
C) $11,500; the award from her job is excluded 
D) $11,600; the plaque may be excluded 
E) $11,625; everything is included at the highest amount

Question 4

Which of the following are not excludable as an employee fringe benefit?

Accepted Answer

A) Employee deductions of $4,200 for dependent childcare expenses 
B) Premiums for up to $50,000 of group term life insurance 
C) An employee discount that permits the sale of merchandise to employees for just over cost 
D) Public transportation costs of $130 per month provided by the employer 
E) All of these are excludable as an employee fringe benefit 
A) Employee deductions of $4,200 for dependent childcare expenses 
B) Premiums for up to $50,000 of group term life insurance 
C) An employee discount that permits the sale of merchandise to employees for just over cost 
D) Public transportation costs of $130 per month provided by the employer 
E) All of these are excludable as an employee fringe benefit

Question 5

Indicate whether each of the items listed below would be (a) included in gross income or (b) excluded from gross income for the 2019 tax year.
-Farm income

Accepted Answer

A) Included 
B) Excluded 
A) Included 
B) Excluded

Question 6

Jack is a lawyer and Jeri is a child psychologist. Jack prepares Jeri's estate planning at no charge and Jeri agrees to counsel Jack's daughter six times at no charge in return for the estate planning. The value of the estate planning is $1,000 and the value of the therapy sessions is $1,000.
a. How much income does Jack have? Why?
b. How much income does Jeri have? Why?

Accepted Answer

a. $1,000. Taxable income includes "all

Question 7

Interest earned on bonds issued by a state government is fully taxable.

Accepted Answer

A) True 
 B)False

Question 8

Helga receives a $300,000 life insurance payment when her boyfriend Andy dies. How much of the payment is taxable to Helga?

Accepted Answer

None of the payment is taxable

Question 9

Which of the following is nontaxable income to the recipient for tax purposes?

Accepted Answer

A) Salary income 
B) Income from real estate rental property 
C) Income from tips 
D) Inheritances 
E) None of these 
A) Salary income 
B) Income from real estate rental property 
C) Income from tips 
D) Inheritances 
E) None of these

Question 10

Which of the following fringe benefits is taxable to the employee receiving the benefit?

Accepted Answer

A) A subscription to a tax journal provided by the employer to a corporation's tax accountant 
B) A small discount on toys granted to the salesperson for a toy store 
C) Incidental use of the company's copier by an office worker 
D) A 15 percent discount on investment real estate granted to the employee of a real estate developer 
E) All of the above are tax-free 
A) A subscription to a tax journal provided by the employer to a corporation's tax accountant 
B) A small discount on toys granted to the salesperson for a toy store 
C) Incidental use of the company's copier by an office worker 
D) A 15 percent discount on investment real estate granted to the employee of a real estate developer 
E) All of the above are tax-free

Question 11

Amounts received as scholarships for books and tuition may be excluded from the recipient's taxable income.

Accepted Answer

A) True 
 B)False

Question 12

Elsie received the following distributions from Virginiana Mutual Fund for the calendar year 2019: $$\begin{array} { l r } 
\text { Ordinary dividends (nonqualifying) } & \$ 250 \
\text { Capital gain distributions } & \$ 170 \
\text { Nontaxable distributions } & \$ 80
\end{array}$$ Elmer, Elsie's husband, did not own any of the Virginiana Mutual Fund shares, but he did receive $1,600 in interest on a savings account at the Moss National Bank. Elmer and Elsie filed a joint income tax return for 2019. What portion of the distributions from Virginiana Mutual Fund is taxable as ordinary income on their 2019 individual income tax return?

Accepted Answer

A) $0 
B) $250 
C) $420 
D) $500 
E) None of these 
A) $0 
B) $250 
C) $420 
D) $500 
E) None of these

Question 13

Answer the following questions regarding the taxability of Social Security payments.
a. Will a taxpayer with no income other than Social Security have to include the Social Security in taxable income?
b. Will a taxpayer with a large amount of municipal bond income, but no taxable income, likely have to pay tax on part of his or her Social Security?
c. What is the maximum percentage of Social Security benefits which may be subject to tax on an individual's tax return?

Accepted Answer

a. No. The taxpayer's income is below th

Question 14

Qualified dividends are given special tax treatment. Describe how they are taxed in 2019.

Accepted Answer

Qualified dividends are taxed at 0, 15,

Question 15

Van is sick and tired of his job. His doctor certifies that his health may be compromised if he continues to work at his current job. He sells his life insurance policy to Life Settlements, Inc. for $50,000 so he can take a break from work. He has paid $10,000 so far for the policy. How much of the $50,000 must Van include in his taxable income?

Accepted Answer

He must pay tax on the $40,000

Question 16

Peter is required by his 2019 divorce agreement to pay alimony of $4,000 a month and child support of $6,000 a month to his ex-wife Stella. What is the tax treatment of these two payments?
To Peter?
To Stella?

Accepted Answer

Post-2018 divorce:
Peter canno

Question 17

Kim earned $30,000 from Pfizer before she was laid off. She then collected $7,000 of unemployment benefits. Finally, Kim received a $12,500 scholarship for tuition so she could return to college to earn a microbiology degree. How much does Kim need to report as income on her tax return?

Accepted Answer

Kim needs to report $37,000 on

Question 18

In which of the following cases may the employee exclude the meals and/or lodging:

Accepted Answer

A) A taxpayer lives rent-free at the property she manages even though the owner does not require the manager to live on site. 
B) A headmaster at a boarding school is required to be on campus all night. 
C) A president of a major film studio receives a cash allowance to live in Beverly Hills. 
D) An employee has an option of dining in an all-expense paid employer-sponsored cafeteria or dining out of the office. 
A) A taxpayer lives rent-free at the property she manages even though the owner does not require the manager to live on site. 
B) A headmaster at a boarding school is required to be on campus all night. 
C) A president of a major film studio receives a cash allowance to live in Beverly Hills. 
D) An employee has an option of dining in an all-expense paid employer-sponsored cafeteria or dining out of the office.

Question 19

Steve worked as a tech supervisor for a computer company. In September of this year, he was laid off. He was paid unemployment compensation for the rest of the year totaling $7,000. Which of the following is true?

Accepted Answer

A) Steve will have to report all $7,000 of the unemployment compensation as income. 
B) Steve will have to report $4,600 of the unemployment compensation as income. 
C) Unemployment compensation is never taxable. 
D) As long as the unemployment compensation payments are less than the taxpayer's previous salary, they are not taxable. 
E) None of these is true. 
A) Steve will have to report all $7,000 of the unemployment compensation as income. 
B) Steve will have to report $4,600 of the unemployment compensation as income. 
C) Unemployment compensation is never taxable. 
D) As long as the unemployment compensation payments are less than the taxpayer's previous salary, they are not taxable. 
E) None of these is true.

Question 20

Which of the following gifts or prizes would be considered taxable income to the person receiving the gift?

Accepted Answer

A) $5,000 given to the taxpayer by his friend 
B) A mobile home given to the taxpayer by his mother 
C) A ski boat won by the taxpayer on the Price is Right game show 
D) A Mustang GT given to the taxpayer by his brother 
E) None of the above would be considered taxable 
A) $5,000 given to the taxpayer by his friend 
B) A mobile home given to the taxpayer by his mother 
C) A ski boat won by the taxpayer on the Price is Right game show 
D) A Mustang GT given to the taxpayer by his brother 
E) None of the above would be considered taxable

To promote business activity, the tax rules generally are very liberal in treating business gifts as tax-free income to the recipient.

Bonnie receives salary income of $32,000, unemployment compensation of $4,400, and interest income of $1,200 and a gift of $7,000 in cash from her aunt. How much gross income does Bonnie have?

Which of the following are not excludable as an employee fringe benefit?

Indicate whether each of the items listed below would be (a) included in gross income or (b) excluded from gross income for the 2019 tax year. -Farm income

Interest earned on bonds issued by a state government is fully taxable.

Helga receives a $300,000 life insurance payment when her boyfriend Andy dies. How much of the payment is taxable to Helga?

Which of the following is nontaxable income to the recipient for tax purposes?

Which of the following fringe benefits is taxable to the employee receiving the benefit?

Amounts received as scholarships for books and tuition may be excluded from the recipient's taxable income.

Qualified dividends are given special tax treatment. Describe how they are taxed in 2019.

Peter is required by his 2019 divorce agreement to pay alimony of $4,000 a month and child support of $6,000 a month to his ex-wife Stella. What is the tax treatment of these two payments? To Peter? To Stella?

Kim earned $30,000 from Pfizer before she was laid off. She then collected $7,000 of unemployment benefits. Finally, Kim received a $12,500 scholarship for tuition so she could return to college to earn a microbiology degree. How much does Kim need to report as income on her tax return?

In which of the following cases may the employee exclude the meals and/or lodging:

Steve worked as a tech supervisor for a computer company. In September of this year, he was laid off. He was paid unemployment compensation for the rest of the year totaling $7,000. Which of the following is true?

Which of the following gifts or prizes would be considered taxable income to the person receiving the gift?

The Individual Income Tax Return

Business Income and Expenses

Additional Income and the Qualified Business Income Deduction

Deductions for and From AGI

Accounting Periods and Other Taxes

Tax Credits

Depreciation and Sale of Business Property

Payroll, Estimated Payments and Retirement Plans

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters

Exam 2: Gross Income and Exclusions

To promote business activity, the tax rules generally are very liberal in treating business gifts as tax-free income to the recipient.

Bonnie receives salary income of $32,000, unemployment compensation of $4,400, and interest income of $1,200 and a gift of $7,000 in cash from her aunt. How much gross income does Bonnie have?

Which of the following are not excludable as an employee fringe benefit?

Indicate whether each of the items listed below would be (a) included in gross income or (b) excluded from gross income for the 2019 tax year. -Farm income

Interest earned on bonds issued by a state government is fully taxable.

Helga receives a $300,000 life insurance payment when her boyfriend Andy dies. How much of the payment is taxable to Helga?

Which of the following is nontaxable income to the recipient for tax purposes?

Which of the following fringe benefits is taxable to the employee receiving the benefit?

Amounts received as scholarships for books and tuition may be excluded from the recipient's taxable income.

Qualified dividends are given special tax treatment. Describe how they are taxed in 2019.

Peter is required by his 2019 divorce agreement to pay alimony of $4,000 a month and child support of $6,000 a month to his ex-wife Stella. What is the tax treatment of these two payments? To Peter? To Stella?

Kim earned $30,000 from Pfizer before she was laid off. She then collected $7,000 of unemployment benefits. Finally, Kim received a $12,500 scholarship for tuition so she could return to college to earn a microbiology degree. How much does Kim need to report as income on her tax return?

In which of the following cases may the employee exclude the meals and/or lodging:

Steve worked as a tech supervisor for a computer company. In September of this year, he was laid off. He was paid unemployment compensation for the rest of the year totaling $7,000. Which of the following is true?

Which of the following gifts or prizes would be considered taxable income to the person receiving the gift?

The Individual Income Tax Return

Business Income and Expenses

Additional Income and the Qualified Business Income Deduction

Deductions for and From AGI

Accounting Periods and Other Taxes

Tax Credits

Depreciation and Sale of Business Property

Payroll, Estimated Payments and Retirement Plans

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters