Question 1

For tax purposes,one of the requirements to recognize income is:

Accepted Answer

A)  There must be an economic benefit. 
B)  The transaction must occur but it's not necessary to complete it. 
C)  The income can be tax-exempt. 
D)  All of these. 
A)  There must be an economic benefit. 
B)  The transaction must occur but it's not necessary to complete it. 
C)  The income can be tax-exempt. 
D)  All of these.

Question 2

A taxpayer can exclude from gross income any interest earned on bonds issued by any state,any possession of the United States,any political subdivision of either of the foregoing,or of the District of Columbia as long as these bonds are not issued for private activities.

Accepted Answer

A) True 
 B)False

Question 3

Which type of interest received is taxable and must be reported on the tax return?

Accepted Answer

A)  Interest on municipal bonds. 
B)  Tax-exempt interest. 
C)  Interest on a savings account. 
D)  Tax-exempt interest and interest on a savings account. 
A)  Interest on municipal bonds. 
B)  Tax-exempt interest. 
C)  Interest on a savings account. 
D)  Tax-exempt interest and interest on a savings account.

Question 4

Describe the various situations where a taxpayer must file a Schedule B (Forms 1040A or 1040)when receiving interest income.

Accepted Answer

A taxpayer must use Schedule B (Forms 10

Question 5

Imputed interest rules apply to term loans or demand loans in which the interest rate is less than the Applicable Federal Rate (AFR).Which of the following transactions does not fall under these rules? Assume in all situations that interest is below the AFR.

Accepted Answer

A)  Gift loans of $14,000 in which interest foregone is in the form of a gift. 
B)  Loans in which a principal purpose is to avoid tax. 
C)  Loans in which the below-market or interest-free loan would have a significant effect on the tax liability of the borrower or lender. 
D)  Both Gift loans of $14,000 in which interest foregone is in the form of a gift and Loans in which a principal purpose is to avoid tax. 
A)  Gift loans of $14,000 in which interest foregone is in the form of a gift. 
B)  Loans in which a principal purpose is to avoid tax. 
C)  Loans in which the below-market or interest-free loan would have a significant effect on the tax liability of the borrower or lender. 
D)  Both Gift loans of $14,000 in which interest foregone is in the form of a gift and Loans in which a principal purpose is to avoid tax.

Question 6

A taxpayer must report in income imputed interest on a loan made below market interest rate.

Accepted Answer

A) True 
 B)False

Question 7

Jeff owns 200 shares of Coca Cola common stock that have increased in value by $14 each.He must report the increase in income because a transaction has occurred.

Accepted Answer

A) True 
 B)False

Question 8

Jury duty pay is taxable income but it can be deducted from gross income if the amount must be given to the employer.

Accepted Answer

A) True 
 B)False

Question 9

A de minimis benefit is one whose value is so small that keeping track of which employees received the benefit is administratively impractical.

Accepted Answer

A) True 
 B)False

Question 10

For purposes of computing the amount of savings bond interest exempt from tax,Modified AGI is adjusted gross income plus:

Accepted Answer

A)  deduction for student loan interest. 
B)  deduction for moving expenses. 
C)  itemized deductions. 
D)  standard deduction. 
A)  deduction for student loan interest. 
B)  deduction for moving expenses. 
C)  itemized deductions. 
D)  standard deduction.

Question 11

The original issue discount (OID)rules apply to all debt instruments with OID,except:

Accepted Answer

A)  Non-business loans of $10,000 or less between natural persons. 
B)  Tax-exempt debt. 
C)  U.S.savings bonds. 
D)  All of these. 
A)  Non-business loans of $10,000 or less between natural persons. 
B)  Tax-exempt debt. 
C)  U.S.savings bonds. 
D)  All of these.

Question 12

Payments received under workers' compensation acts are taxable to the recipient.

Accepted Answer

A) True 
 B)False

Question 13

Constructive receipt means the income is available to or in the control of the taxpayer regardless of whether the taxpayer chooses to utilize the income.

Accepted Answer

A) True 
 B)False

Question 14

The imputed interest rules apply to the following:

Accepted Answer

A)  Sales of property for $3,000 or less. 
B)  Sales in which all payments are due in six months or less. 
C)  Sale of a personal residence. 
D)  All of these. 
A)  Sales of property for $3,000 or less. 
B)  Sales in which all payments are due in six months or less. 
C)  Sale of a personal residence. 
D)  All of these.

Question 15

For tax purposes,one of the requirements to recognize income is:

Accepted Answer

A)  The transaction does not have to be completed. 
B)  The income cannot be tax-exempt. 
C)  The transaction does not have to have an economic benefit. 
D)  None of these. 
A)  The transaction does not have to be completed. 
B)  The income cannot be tax-exempt. 
C)  The transaction does not have to have an economic benefit. 
D)  None of these.

Question 16

Imputed interest rules do not apply to the following:

Accepted Answer

A)  Sale of property for $3,000 or less. 
B)  Sale of a personal residence. 
C)  Sale of a farm for $1 million or less. 
D)  Both Sale of property for $3,000 or less and Sale of a personal residence. 
A)  Sale of property for $3,000 or less. 
B)  Sale of a personal residence. 
C)  Sale of a farm for $1 million or less. 
D)  Both Sale of property for $3,000 or less and Sale of a personal residence.

Question 17

An individual with an original issue discount (OID)instrument must report annually a portion of the OID as:

Accepted Answer

A)  Interest income. 
B)  Qualified dividend income. 
C)  Capital gains. 
D)  Miscellaneous income. 
A)  Interest income. 
B)  Qualified dividend income. 
C)  Capital gains. 
D)  Miscellaneous income.

Question 18

If a person sells his or her car to a friend for a note receivable,this person has income that needs to be reported.

Accepted Answer

A) True 
 B)False

Question 19

An individual must complete Schedule B (Forms 1040A or 1040)if the following situation occurs:

Accepted Answer

A)  Received interest income of $600. 
B)  Received interest as a nominee of $1,000. 
C)  Received interest income of $1,300. 
D)  Received interest income of $1,750. 
A)  Received interest income of $600. 
B)  Received interest as a nominee of $1,000. 
C)  Received interest income of $1,300. 
D)  Received interest income of $1,750.

Question 20

On December 30,2014,Jeff agreed to repair a damaged house wall and started to work on that date.He will finish and get paid for the job in January of 2015.Jeff needs to record the income received from his work in the year:

Accepted Answer

A)  2014. 
B)  Half in 2014 and the other half in 2015. 
C)  2015. 
D)  He does not have to report the income at all. 
A)  2014. 
B)  Half in 2014 and the other half in 2015. 
C)  2015. 
D)  He does not have to report the income at all.

For tax purposes,one of the requirements to recognize income is:

A taxpayer can exclude from gross income any interest earned on bonds issued by any state,any possession of the United States,any political subdivision of either of the foregoing,or of the District of Columbia as long as these bonds are not issued for private activities.

Which type of interest received is taxable and must be reported on the tax return?

Describe the various situations where a taxpayer must file a Schedule B (Forms 1040A or 1040)when receiving interest income.

Imputed interest rules apply to term loans or demand loans in which the interest rate is less than the Applicable Federal Rate (AFR).Which of the following transactions does not fall under these rules? Assume in all situations that interest is below the AFR.

A taxpayer must report in income imputed interest on a loan made below market interest rate.

Jeff owns 200 shares of Coca Cola common stock that have increased in value by $14 each.He must report the increase in income because a transaction has occurred.

Jury duty pay is taxable income but it can be deducted from gross income if the amount must be given to the employer.

A de minimis benefit is one whose value is so small that keeping track of which employees received the benefit is administratively impractical.

For purposes of computing the amount of savings bond interest exempt from tax,Modified AGI is adjusted gross income plus:

The original issue discount (OID)rules apply to all debt instruments with OID,except:

Payments received under workers' compensation acts are taxable to the recipient.

Constructive receipt means the income is available to or in the control of the taxpayer regardless of whether the taxpayer chooses to utilize the income.

The imputed interest rules apply to the following:

For tax purposes,one of the requirements to recognize income is:

Imputed interest rules do not apply to the following:

An individual with an original issue discount (OID)instrument must report annually a portion of the OID as:

If a person sells his or her car to a friend for a note receivable,this person has income that needs to be reported.

An individual must complete Schedule B (Forms 1040A or 1040)if the following situation occurs:

On December 30,2014,Jeff agreed to repair a damaged house wall and started to work on that date.He will finish and get paid for the job in January of 2015.Jeff needs to record the income received from his work 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

Filters

Exam 3: Gross Income: Inclusions and Exclusions

For tax purposes,one of the requirements to recognize income is:

A taxpayer can exclude from gross income any interest earned on bonds issued by any state,any possession of the United States,any political subdivision of either of the foregoing,or of the District of Columbia as long as these bonds are not issued for private activities.

Which type of interest received is taxable and must be reported on the tax return?

Describe the various situations where a taxpayer must file a Schedule B (Forms 1040A or 1040)when receiving interest income.

Imputed interest rules apply to term loans or demand loans in which the interest rate is less than the Applicable Federal Rate (AFR).Which of the following transactions does not fall under these rules? Assume in all situations that interest is below the AFR.

A taxpayer must report in income imputed interest on a loan made below market interest rate.

Jeff owns 200 shares of Coca Cola common stock that have increased in value by $14 each.He must report the increase in income because a transaction has occurred.

Jury duty pay is taxable income but it can be deducted from gross income if the amount must be given to the employer.

A de minimis benefit is one whose value is so small that keeping track of which employees received the benefit is administratively impractical.

For purposes of computing the amount of savings bond interest exempt from tax,Modified AGI is adjusted gross income plus:

The original issue discount (OID)rules apply to all debt instruments with OID,except:

Payments received under workers' compensation acts are taxable to the recipient.

Constructive receipt means the income is available to or in the control of the taxpayer regardless of whether the taxpayer chooses to utilize the income.

The imputed interest rules apply to the following:

For tax purposes,one of the requirements to recognize income is:

Imputed interest rules do not apply to the following:

An individual with an original issue discount (OID)instrument must report annually a portion of the OID as:

If a person sells his or her car to a friend for a note receivable,this person has income that needs to be reported.

An individual must complete Schedule B (Forms 1040A or 1040)if the following situation occurs:

On December 30,2014,Jeff agreed to repair a damaged house wall and started to work on that date.He will finish and get paid for the job in January of 2015.Jeff needs to record the income received from his work 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

Filters