Exam 3: Gross Income: Inclusions and Exclusions

In general,an individual must recognize income on his or her tax return if the transaction has economic benefit,the transaction has reached a conclusion and the income from the transaction is tax-exempt income.

(True/False)

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Question 61

Payments under written dependent care assistance plans are tax-free,except that the exclusion for a single person cannot exceed his or her earned income and cannot exceed ________________.

(Multiple Choice)

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Question 62

A taxpayer must file a Schedule B (Forms 1040A or 1040)if he or she has received taxable interest of $1,550.

(True/False)

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Question 63

Interest income on Series EE and Series E U.S.Savings Bonds can be reported:

(Multiple Choice)

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Question 64

Taxpayers are not required to "impute interest" on a deferred payment contract for which no interest,or a low rate of interest,is stated.

(True/False)

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Question 65

For most individuals,interest income comes from interest-earning deposits at banks,savings and loans,or credit unions.

(True/False)

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Question 66

Morris redeemed $6,000 (principal of $4,500 and interest of $1,500)of Series I Savings Bonds to pay qualified higher education expenses.His qualified expenses for the year totaled $6,500 and AGI consists of wages of $32,000.What is the amount of interest that Morris can exclude from income?

(Multiple Choice)

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Question 67

Receipt of property or services does not trigger income recognition for tax purposes.

(True/False)

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Question 68

The taxability of social security benefits depends on the "provisional income" and filing status of the taxpayer.

(True/False)

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Question 69

For tax purposes,income is recognized if the transaction meets three conditions: economic benefit,occurrence and completion,and not exempt from tax.

(True/False)

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Question 70

Pedro agreed to repair a house for a client and started to work on December 30,2012.On January 2,2014,he completed the job and received payment from the client.Pedro must record the income in:

(Multiple Choice)

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Question 71

If Alex,an attorney,agrees to provide legal services to a friend in exchange for the friend agreeing to fix his car,Alex and his friend will have to report income on this transaction at fair market value.

(True/False)

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Question 72

Working condition fringes include:

(Multiple Choice)

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Question 73

When filing their tax returns,almost all individuals use:

(Multiple Choice)

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Question 74

If the process of a transaction begins and ends with an economic benefit for the taxpayer,he or she must report it in income even though the income is specifically exempt from tax.

(True/False)

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(70)

Question 75

If Elliot,an accountant,agrees to provide tax services to a neighbor in exchange for the neighbor agreeing to fix his pool,Elliot but not his neighbor will have to report income on this transaction at fair market value.

(True/False)

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(94)

Question 76

Banks and credit unions report interest income to taxpayers on Form 1099-INT.

(True/False)

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Question 77

Martin redeemed $3,000 (principal of $2,000 and interest of $1,000)of Series I Savings Bonds to pay qualified higher education expenses.His qualified expenses for the year totaled $2,500 and AGI consists of wages of $20,000.What is the amount of interest that Martin must include in income? (Round interim calculations to three decimal places)

(Multiple Choice)

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(92)

Question 78

What is the tax liability for a taxpayer who is married filing jointly with taxable income of $67,500,that includes a taxable qualified dividend of $1,000? All answers should be rounded to the nearest dollar.

(Multiple Choice)

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(64)

Question 79

Under the cash receipts and disbursements method,the taxpayer reports income in the year:

(Multiple Choice)

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Question 80

Showing 61 - 80 of 125

In general,an individual must recognize income on his or her tax return if the transaction has economic benefit,the transaction has reached a conclusion and the income from the transaction is tax-exempt income.

Payments under written dependent care assistance plans are tax-free,except that the exclusion for a single person cannot exceed his or her earned income and cannot exceed ________________.

A taxpayer must file a Schedule B (Forms 1040A or 1040)if he or she has received taxable interest of $1,550.

Interest income on Series EE and Series E U.S.Savings Bonds can be reported:

Taxpayers are not required to "impute interest" on a deferred payment contract for which no interest,or a low rate of interest,is stated.

For most individuals,interest income comes from interest-earning deposits at banks,savings and loans,or credit unions.

Morris redeemed $6,000 (principal of $4,500 and interest of $1,500)of Series I Savings Bonds to pay qualified higher education expenses.His qualified expenses for the year totaled $6,500 and AGI consists of wages of $32,000.What is the amount of interest that Morris can exclude from income?

Receipt of property or services does not trigger income recognition for tax purposes.

The taxability of social security benefits depends on the "provisional income" and filing status of the taxpayer.

For tax purposes,income is recognized if the transaction meets three conditions: economic benefit,occurrence and completion,and not exempt from tax.

Pedro agreed to repair a house for a client and started to work on December 30,2012.On January 2,2014,he completed the job and received payment from the client.Pedro must record the income in:

If Alex,an attorney,agrees to provide legal services to a friend in exchange for the friend agreeing to fix his car,Alex and his friend will have to report income on this transaction at fair market value.

Working condition fringes include:

When filing their tax returns,almost all individuals use:

If the process of a transaction begins and ends with an economic benefit for the taxpayer,he or she must report it in income even though the income is specifically exempt from tax.

If Elliot,an accountant,agrees to provide tax services to a neighbor in exchange for the neighbor agreeing to fix his pool,Elliot but not his neighbor will have to report income on this transaction at fair market value.

Banks and credit unions report interest income to taxpayers on Form 1099-INT.

What is the tax liability for a taxpayer who is married filing jointly with taxable income of $67,500,that includes a taxable qualified dividend of $1,000? All answers should be rounded to the nearest dollar.

Under the cash receipts and disbursements method,the taxpayer reports income in the year:

Introduction to Taxation, the Income Tax Formula, and Form 1040ez

Expanded Tax Formula, Forms 1040a and 1040, and Basic Concepts

Adjustments for Adjusted Gross Income

Itemized Deductions

Self-Employed Business Income

Capital Gains and Other Sales of Property

Rental Property, Royalties, and Income From Flow-Through Entities

Tax Credits

Payroll Taxes

Retirement and Other Tax-Deferred Plans and Annuities

Special Property Transactions

At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Partnership Taxation

Corporate Taxation

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