Question 1

Frank received the following benefits from his employer this year.What amount must Frank include in his gross income?

Accepted Answer

A)  $54,450 
B)  $57,350 
C)  $56,250 
D)  $59,150 
E)  Zero - these benefits are excluded from gross income. 
A)  $54,450 
B)  $57,350 
C)  $56,250 
D)  $59,150 
E)  Zero - these benefits are excluded from gross income.

Question 2

This year Ann has the following stock transactions.What amount is included in her gross income if Ann paid a $200 selling commission for each sale?

Accepted Answer

$2,100.ATT: ($9,500 − $200)− $

Question 3

Rental income generated by a partnership is reported by the partners as dividend income on their own individual tax returns.

Accepted Answer

A) True 
 B)False

Question 4

When an asset is sold,the taxpayer calculates the gain or loss on the sale of the asset by subtracting the tax basis of the asset from the proceeds of the sale.

Accepted Answer

A) True 
 B)False

Question 5

Gross income includes:

Accepted Answer

A)  all income from whatever source derived unless excluded by law. 
B)  excluded income. 
C)  deferred income. 
D)  all realized income. 
E)  All of the choices are correct. 
A)  all income from whatever source derived unless excluded by law. 
B)  excluded income. 
C)  deferred income. 
D)  all realized income. 
E)  All of the choices are correct.

Question 6

In April of this year Victoria received a $1,400 refund of state income taxes that she paid last year.Last year Victoria claimed itemized deductions of $8,890.Victoria's itemized deductions included state income taxes paid of $3,750.How much of the refund,if any,must Victoria include in gross income if the standard deduction last year was $6,300?

Accepted Answer

$1,400
The tax benefit is the lesser of

Question 7

Constructive receipt represents the principle that cash basis taxpayers will be taxed on income when it is made available to them without substantial restrictions.

Accepted Answer

A) True 
 B)False

Question 8

Ophra is a cash basis taxpayer who is employed in the publishing industry.This year her employer informed her that because of her outstanding performance she is entitled to a free world cruise.Ophra asked her employer to issue the cruise tickets to her parents,and he complied with this request.Identify the principle that will determine whether Ophra or her parents are taxed on the value of the cruise tickets:

Accepted Answer

A)  Assignment of income. 
B)  Constructive receipt. 
C)  Return of capital principle. 
D)  Wherewithal to pay. 
E)  All of the choices are correct. 
A)  Assignment of income. 
B)  Constructive receipt. 
C)  Return of capital principle. 
D)  Wherewithal to pay. 
E)  All of the choices are correct.

Question 9

Rhett made his annual gambling trip to Uwin Casino.On this trip Rhett won $250 at the slots and $1,200 at poker.Also this year,Rhett made several trips to the race track,but he lost $700 on his various wagers.What amount must Rhett include in his gross income?

Accepted Answer

A)  $1,450 
B)  $1,200 
C)  $750 
D)  $250 
E)  Zero - gambling winnings are not included in gross income 
A)  $1,450 
B)  $1,200 
C)  $750 
D)  $250 
E)  Zero - gambling winnings are not included in gross income

Question 10

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 11

Jake sold his car for $2,400 in cash this year.He will realize a taxable gain of $1,000 if he purchased the car for $1,400.

Accepted Answer

A) True 
 B)False

Question 12

Robert will be working overseas on a permanent assignment for an international company beginning on March 1 of this year (306 days this year).His salary is $11,000 per month while Robert is overseas,but only $9,200 per month otherwise.What is the minimum amount of Robert's salary that he must include in gross income this year? (Round your final answer to the nearest whole dollar amount & assume that there are 365 days in this year).

Accepted Answer

$42,804.
The maximum foreign earned inco

Question 13

This year Ed celebrated his 25ᵗʰ year as an employee of Designer Jeans Company.In recognition of his long and loyal service,the company awarded Ed a gold watch worth $250 and a $2,000 cash bonus.What amount must Ed include in his gross income?

Accepted Answer

A)  $2,250. 
B)  $2,000. 
C)  $250. 
D)  Zero if Ed offers to contribute his watch and bonus to a qualified charity. 
E)  Zero - all employee awards are excluded from gross income. 
A)  $2,250. 
B)  $2,000. 
C)  $250. 
D)  Zero if Ed offers to contribute his watch and bonus to a qualified charity. 
E)  Zero - all employee awards are excluded from gross income.

Question 14

Deb has found it very difficult to repay her loans.Because of these difficulties,the bank decided to forgive one of her most recent loans,an amount of $45,000.After the loan was discharged,Deb had total assets of $232,000 and her remaining loans total $217,000.What amount must Deb include in her gross income?

Accepted Answer

A)  $15,000 
B)  $45,000 
C)  $30,000 
D)  $28,000 
E)  Zero - Deb was not solvent when the loan was discharged 
A)  $15,000 
B)  $45,000 
C)  $30,000 
D)  $28,000 
E)  Zero - Deb was not solvent when the loan was discharged

Question 15

Aubrey and Justin divorced on June 30 of this year.Through June 30 Aubrey earned $62,000 of salary and Justin earned $45,000.For the year Aubrey reported a total salary of $130,000 and Justin earned a total salary of $88,000.Aubrey and Justin live in a community property state.How much of the income will Aubrey report on her tax return for this year?

Accepted Answer

$121,500 = [1/2 × ($62,000 + $45,000)] +

Question 16

Worker's compensation benefits are excluded from gross income.

Accepted Answer

A) True 
 B)False

Question 17

Sally is a cash basis taxpayer and a member of the Valley Barter club.This year Sally provided 100 hours of sewing services to the barter club in exchange for two football playoff tickets.Which of the following is a true statement?

Accepted Answer

A)  Sally need not recognize any gross income unless she sells the football tickets. 
B)  Sally's exchange does not result in taxable income. 
C)  Sally is taxed on the value of the football tickets even if she cannot attend the game. 
D)  Sally is taxed on the value of her sewing services only if she is a professional seamstress. 
E)  None of the choices are true. 
A)  Sally need not recognize any gross income unless she sells the football tickets. 
B)  Sally's exchange does not result in taxable income. 
C)  Sally is taxed on the value of the football tickets even if she cannot attend the game. 
D)  Sally is taxed on the value of her sewing services only if she is a professional seamstress. 
E)  None of the choices are true.

Question 18

To provide relief from double taxation,Congress allows a foreign-unearned income exclusion for interest and dividends earned in foreign countries.

Accepted Answer

A) True 
 B)False

Question 19

Kathryn is employed by Acme and they have been very pleased with her performance this year.In December Kathryn was granted an extra week off with pay (pay for the week totaled $2,000).In addition,Kathryn was given tickets to a football bowl game worth $800 (Kathryn didn't use the tickets - she hates football).Just right before year-end Kathryn was allowed to order new office furniture and Acme told her to take the old office furniture home.The office furniture was originally purchased for $7,000,but it was fully depreciated and only worth about $1,000.Determine the amount Kathryn should include in her gross income

Accepted Answer

$2,000 + $800 + $1,0

Question 20

Generally,85 percent of Social Security benefits are included in income of high income taxpayers.

Accepted Answer

A) True 
 B)False

Frank received the following benefits from his employer this year.What amount must Frank include in his gross income?

This year Ann has the following stock transactions.What amount is included in her gross income if Ann paid a $200 selling commission for each sale?

Rental income generated by a partnership is reported by the partners as dividend income on their own individual tax returns.

When an asset is sold,the taxpayer calculates the gain or loss on the sale of the asset by subtracting the tax basis of the asset from the proceeds of the sale.

Gross income includes:

Constructive receipt represents the principle that cash basis taxpayers will be taxed on income when it is made available to them without substantial restrictions.

Rhett made his annual gambling trip to Uwin Casino.On this trip Rhett won $250 at the slots and $1,200 at poker.Also this year,Rhett made several trips to the race track,but he lost $700 on his various wagers.What amount must Rhett include in his gross income?

Jake sold his car for $2,400 in cash this year.He will realize a taxable gain of $1,000 if he purchased the car for $1,400.

This year Ed celebrated his 25ᵗʰ year as an employee of Designer Jeans Company.In recognition of his long and loyal service,the company awarded Ed a gold watch worth $250 and a $2,000 cash bonus.What amount must Ed include in his gross income?

Worker's compensation benefits are excluded from gross income.

Sally is a cash basis taxpayer and a member of the Valley Barter club.This year Sally provided 100 hours of sewing services to the barter club in exchange for two football playoff tickets.Which of the following is a true statement?

To provide relief from double taxation,Congress allows a foreign-unearned income exclusion for interest and dividends earned in foreign countries.

Generally,85 percent of Social Security benefits are included in income of high income taxpayers.

An Introduction to Tax

Tax Compliance, The IRS and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Exemptions, 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

Filters

Exam 5: Gross Income and Exclusions

Frank received the following benefits from his employer this year.What amount must Frank include in his gross income?

This year Ann has the following stock transactions.What amount is included in her gross income if Ann paid a $200 selling commission for each sale?

Rental income generated by a partnership is reported by the partners as dividend income on their own individual tax returns.

When an asset is sold,the taxpayer calculates the gain or loss on the sale of the asset by subtracting the tax basis of the asset from the proceeds of the sale.

Gross income includes:

Constructive receipt represents the principle that cash basis taxpayers will be taxed on income when it is made available to them without substantial restrictions.

Rhett made his annual gambling trip to Uwin Casino.On this trip Rhett won $250 at the slots and $1,200 at poker.Also this year,Rhett made several trips to the race track,but he lost $700 on his various wagers.What amount must Rhett include in his gross income?

Jake sold his car for $2,400 in cash this year.He will realize a taxable gain of $1,000 if he purchased the car for $1,400.

This year Ed celebrated his 25ᵗʰ year as an employee of Designer Jeans Company.In recognition of his long and loyal service,the company awarded Ed a gold watch worth $250 and a $2,000 cash bonus.What amount must Ed include in his gross income?

Worker's compensation benefits are excluded from gross income.

Sally is a cash basis taxpayer and a member of the Valley Barter club.This year Sally provided 100 hours of sewing services to the barter club in exchange for two football playoff tickets.Which of the following is a true statement?

To provide relief from double taxation,Congress allows a foreign-unearned income exclusion for interest and dividends earned in foreign countries.

Generally,85 percent of Social Security benefits are included in income of high income taxpayers.

An Introduction to Tax

Tax Compliance, The IRS and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Exemptions, 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

Filters