Exam 2: Gross Income and Exclusions

If a taxpayer holding EE bonds makes an election with respect to the taxation of the bonds, how is the interest which accrues on the bonds, but is not paid, taxed each year?

Jerry and Sally were divorced under an agreement executed July 1, 2019. The terms of the agreement provide that Jerry will transfer to Sally his interest in a rental house worth $250,000 with a tax basis to Jerry of $80,000. What is the amount of the gain that must be recognized by Jerry on the transfer of the property and what is Sally's tax basis in the property after the transfer, respectively?

Which of the following is correct?

Roger is required under a 2012 divorce decree to pay $500 of alimony and $200 of child support per month for 12 years. In addition, Roger makes a voluntary payment of $100 per month. How much of the total monthly payment is deductible by Roger?

Nicole is a student at USB Law School; she receives a $52,000 scholarship for 2019. Of the $52,000, $40,000 is used for tuition, $5,000 is used for books, and $7,000 is used for room and board. How much of the scholarship is excluded from taxable income for Nicole in 2019?

Joey is a single taxpayer. Joey's employer pays $1,800 per year for his health insurance. During the year, Joey had medical expenses of $2,500 and the insurance company reimbursed him for the full $2,500. How much of the above amounts, if any, must be included in Joey's gross income? Why?

In 2019, Uriah received the following interest payments: Interest of $300 on an overpayment of 2018 Federal income taxes Interest of $400 from his bank certificate of deposit. Interest of $1,000 on municipal bonds Interest of $1,500 on US savings bonds (Series HH) What amount, if any, should Uriah report as taxable interest income on his 2019 individual income tax return?

Richard and Alice are divorced and under the terms of their written divorce agreement signed on December 30, 2011, Richard was required to pay Alice $1,500 per month of which $600 was designated as child support. He made 12 such payments in 2019. Additionally, Richard voluntarily paid Alice $1,200 per month for 12 months of 2019, no portion of which was designated as child support. Assuming that Alice has no other income, her tax return for 2019 should show gross income of:

Susie received unemployment benefits in the current year.

Most states are community property states.

A taxpayer in the 33 percent tax bracket invests in a New York City Bond paying 5 percent interest. What taxable interest rate would provide the same after-tax return?

Richard, who retired on April 30, 2019, receives a monthly employee annuity benefit of $1,400 payable for life, beginning May 1, 2019. During his years of employment, Richard contributed $29,400 to the company's plan. Richard's age on May 1 is 66. Using the simplified method, how much of the $11,200 annuity payment received during 2019 may Richard exclude from gross income?

Which of the following would result in life insurance proceeds that are taxable to the recipient?

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. -Unemployment compensation

To pay for college, Henry received the following: $1,000 scholarship from the Thespian Club to pay for books $4,000 scholarship from the Elks Lodge for tuition $5,000 worth of room and board as a dorm supervisor through a work-study program How much income must Henry report on his tax return?

Payments made to a qualified retirement plan by an employer are considered part of the employee's investment in the contract for calculation of the annuity exclusion ratio.

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. -Receipt of alimony in 2019 from a 2016 divorce

Mary received the following items during the current year: Christmas bonus from her employer \ 600 Christmas gift from her father \ 100 Unemployment compens ation \ 35 What is the total amount of the above items that must be included in Mary's current year gross income?

For the current year, the maximum percentage of Social Security benefits which might be included in a taxpayer's gross income is?

Unemployment compensation is fully taxable to the individual receiving the compensation.