Question 1

All taxpayers may deduct up to $4,000 of higher education tuition expenses.

Accepted Answer

A) True 
 B)False

Question 2

The value of lodging provided to a professor to enable him to live on the campus is excluded from gross income.

Accepted Answer

A) True 
 B)False

Question 3

As a new benefit to employees, the Acme Company is providing a dining allowance every Tuesday for use in one of the twenty restaurants that they own around town. Should this benefit be included in the wages of the employees?

Accepted Answer

Yes. The meals are not being p

Question 4

Which of the following is correct for Qualified Tuition Programs?

Accepted Answer

A) Contributions are deductible and qualified educational expense distributions are tax-free. 
B) Contributions are not deductible and qualified educational expense distributions are tax-free. 
C) Contributions are deductible and qualified educational expense distributions are taxable. 
D) Contributions are not deductible and qualified educational expense distributions are taxable. 
A) Contributions are deductible and qualified educational expense distributions are tax-free. 
B) Contributions are not deductible and qualified educational expense distributions are tax-free. 
C) Contributions are deductible and qualified educational expense distributions are taxable. 
D) Contributions are not deductible and qualified educational expense distributions are taxable.

Question 5

Elmore receives a rental property as an inheritance from his grandmother. The rental property is worth $500,000 and Elmore collected rental income of $24,000 during the year.
For the year, how much is Elmore's gross income as a result of the inheritance?

Accepted Answer

$24,000, t

Question 6

Which of the following is excluded from gross income?

Accepted Answer

A) Prizes 
B) Scholarships for tuition 
C) Hobby income 
D) Rental income 
E) All of these are included in gross income 
A) Prizes 
B) Scholarships for tuition 
C) Hobby income 
D) Rental income 
E) All of these are included in gross income

Question 7

Employer-provided spending accounts:

Accepted Answer

A) May be set up for tax-free vacation savings 
B) Are not allowed for dependent care 
C) Do not require that the employee provide receipts for the expenses incurred 
D) Allow qualifying expenses to be treated as tax-free reductions in the employees' salaries 
A) May be set up for tax-free vacation savings 
B) Are not allowed for dependent care 
C) Do not require that the employee provide receipts for the expenses incurred 
D) Allow qualifying expenses to be treated as tax-free reductions in the employees' salaries

Question 8

If a divorce agreement executed in the 2017 specifies that a portion of the amount of an alimony payment is contingent upon the status of a child, that portion is considered to be a child support payment.

Accepted Answer

A) True 
 B)False

Question 9

An auto that is received as a prize should be included in the taxpayer's income at its list price rather than its fair market value.

Accepted Answer

A) True 
 B)False

Question 10

Interest income received by a cash basis taxpayer is generally reported in the tax year it is received.

Accepted Answer

A) True 
 B)False

Question 11

Ordinarily life insurance proceeds are excluded from gross income. Why would they be taxable if the policy had been transferred for valuable consideration, prior to the death of the insured?

Accepted Answer

If a policy is transferred for valuable

Question 12

A "no-additional-cost" service includes only those services in the major line of business in which the employee is employed.

Accepted Answer

A) True 
 B)False

Question 13

Rob is 8 years old and won a sports car valued at $30,000 in a drawing at Disneyland this year. How much income, if any, must Rob report on his tax return for this year? Why?

Accepted Answer

$30,000. Prizes are

Question 14

Child support payments are deductible by the spouse making the payments.

Accepted Answer

A) True 
 B)False

Question 15

In some cases, Social Security benefits may be partially taxable.

Accepted Answer

A) True 
 B)False

Question 16

As a Christmas thank you for being a good employee, Ed's TV Repair gave 62-year-old Edwina three shares of its stock worth $20 per share. Edwina then received dividends of $1 per share related to the stock. How much should be included in Edwina's gross income?

Accepted Answer

A) $0 
B) $3 
C) $60 
D) $63 
E) None of these 
A) $0 
B) $3 
C) $60 
D) $63 
E) None of these

Question 17

Elmer received the following distributions from Virginiana Mutual Fund for the calendar year 2019: $$\begin{array} { l r } 
\text { Ordinary dividends } & \$ 250 \
\text { Capital gain distributions } & \$ 170 \
\text { Nontaxable distributions } & \$ 80
\end{array}$$ Elsie, Elmer's wife, did not own any of the Virginiana Mutual Fund shares, but she did receive $1,475 in interest on a savings account at the Moss National Bank and $175 in interest on California Municipal Bonds. Elmer and Elsie filed a joint income tax return for 2019. What amount is reportable as taxable interest income?

Accepted Answer

A) $0 
B) $175 
C) $1,475 
D) $1,650 
E) None of the above 
A) $0 
B) $175 
C) $1,475 
D) $1,650 
E) None of the above

Question 18

In all community property states, income from community property is community income.

Accepted Answer

A) True 
 B)False

Question 19

William, a single taxpayer, works for the men's clothing division of a large corporation. During the year, William received the following fringe benefits: 20 percent discount on men's clothing (the usual markup is 40 percent)
15 percent discount on toys from the toy division of the company (the usual markup is 25 percent) Personal copies on the company's copier
A subscription to Men's Clothing Weekly
Use of the company's athletic facilities As a result of receiving the above fringe benefits, what amount must William include in his current year gross income?

Accepted Answer

$100, the

Question 20

Which taxpayer would benefit the most from a tax-free municipal bond compared to a taxable bond?

Accepted Answer

A) A taxpayer whose only income is from Social Security 
B) A taxpayer who won a mega-million-dollar lottery 
C) The average low income worker 
D) They would all equally benefit from the tax-free municipal bond 
A) A taxpayer whose only income is from Social Security 
B) A taxpayer who won a mega-million-dollar lottery 
C) The average low income worker 
D) They would all equally benefit from the tax-free municipal bond

All taxpayers may deduct up to $4,000 of higher education tuition expenses.

The value of lodging provided to a professor to enable him to live on the campus is excluded from gross income.

As a new benefit to employees, the Acme Company is providing a dining allowance every Tuesday for use in one of the twenty restaurants that they own around town. Should this benefit be included in the wages of the employees?

Which of the following is correct for Qualified Tuition Programs?

Elmore receives a rental property as an inheritance from his grandmother. The rental property is worth $500,000 and Elmore collected rental income of $24,000 during the year. For the year, how much is Elmore's gross income as a result of the inheritance?

Which of the following is excluded from gross income?

Employer-provided spending accounts:

If a divorce agreement executed in the 2017 specifies that a portion of the amount of an alimony payment is contingent upon the status of a child, that portion is considered to be a child support payment.

An auto that is received as a prize should be included in the taxpayer's income at its list price rather than its fair market value.

Interest income received by a cash basis taxpayer is generally reported in the tax year it is received.

Ordinarily life insurance proceeds are excluded from gross income. Why would they be taxable if the policy had been transferred for valuable consideration, prior to the death of the insured?

A "no-additional-cost" service includes only those services in the major line of business in which the employee is employed.

Rob is 8 years old and won a sports car valued at $30,000 in a drawing at Disneyland this year. How much income, if any, must Rob report on his tax return for this year? Why?

Child support payments are deductible by the spouse making the payments.

In some cases, Social Security benefits may be partially taxable.

As a Christmas thank you for being a good employee, Ed's TV Repair gave 62-year-old Edwina three shares of its stock worth $20 per share. Edwina then received dividends of $1 per share related to the stock. How much should be included in Edwina's gross income?

In all community property states, income from community property is community income.

Which taxpayer would benefit the most from a tax-free municipal bond compared to a taxable bond?

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

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Exam 2: Gross Income and Exclusions

All taxpayers may deduct up to $4,000 of higher education tuition expenses.

The value of lodging provided to a professor to enable him to live on the campus is excluded from gross income.

As a new benefit to employees, the Acme Company is providing a dining allowance every Tuesday for use in one of the twenty restaurants that they own around town. Should this benefit be included in the wages of the employees?

Which of the following is correct for Qualified Tuition Programs?

Elmore receives a rental property as an inheritance from his grandmother. The rental property is worth $500,000 and Elmore collected rental income of $24,000 during the year. For the year, how much is Elmore's gross income as a result of the inheritance?

Which of the following is excluded from gross income?

Employer-provided spending accounts:

If a divorce agreement executed in the 2017 specifies that a portion of the amount of an alimony payment is contingent upon the status of a child, that portion is considered to be a child support payment.

An auto that is received as a prize should be included in the taxpayer's income at its list price rather than its fair market value.

Interest income received by a cash basis taxpayer is generally reported in the tax year it is received.

Ordinarily life insurance proceeds are excluded from gross income. Why would they be taxable if the policy had been transferred for valuable consideration, prior to the death of the insured?

A "no-additional-cost" service includes only those services in the major line of business in which the employee is employed.

Rob is 8 years old and won a sports car valued at $30,000 in a drawing at Disneyland this year. How much income, if any, must Rob report on his tax return for this year? Why?

Child support payments are deductible by the spouse making the payments.

In some cases, Social Security benefits may be partially taxable.

As a Christmas thank you for being a good employee, Ed's TV Repair gave 62-year-old Edwina three shares of its stock worth $20 per share. Edwina then received dividends of $1 per share related to the stock. How much should be included in Edwina's gross income?

In all community property states, income from community property is community income.

Which taxpayer would benefit the most from a tax-free municipal bond compared to a taxable bond?

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