Question 1

Trevor received a gift of $25,000 in cash from his rich uncle. Trevor must include $15,000 of this gift in his gross income this year.

Accepted Answer

A) True 
 B)False

Question 2

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 3

Blake is a limited partner in Kling-On Partners. This year Kling-On reported that Blake's share of dividend income was $3,700 and his share of municipal interest was $2,750. Early this year Blake found a bundle of $100 bills in the alley outside his apartment. When no one claimed the money, the cash (a total of $2,400) was returned to Blake. Finally, Blake earned salary of $42,000 but almost $6,500 was withheld for income taxes and FICA tax. Compute Blake's realized income and gross income.

Accepted Answer

$3,700 + $2,750 + $2

Question 4

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 5

The assignment of income doctrine requires that to shift income from property to another person, the taxpayer must transfer only the income to the other person.

Accepted Answer

A) True 
 B)False

Question 6

Shaun is a student who has received an academic scholarship to State University. The scholarship paid $14,000 for tuition, $2,500 for fees, and $1,000 for books. In addition, Shaun's dormitory fees of $8,500 were paid by the University when he agreed to counsel freshman on campus living. What amount must Shaun include in his gross income?

Accepted Answer

A)  $9,500 
B)  $11,000 
C)  $2,500 
D)  $8,500 
E)  Zero - None of these benefits is included in gross income 
A)  $9,500 
B)  $11,000 
C)  $2,500 
D)  $8,500 
E)  Zero - None of these benefits is included in gross income

Question 7

Wendell is an executive with CFO Tires. At the beginning of this year the corporation loaned Wendell $50,000 at an interest rate of one percent. Wendell would have paid interest of $2,500 this year if the interest rate on the loan had been set at the prevailing Federal interest rate. Wendell used the funds as a down payment on a vacation home and during the year he paid $500 of interest to CFO. On December 31, CFO forgave the loan and remaining interest. What amount of gross income does Wendell recognize from the loan this year?

Accepted Answer

The answer of Wendell is an executive with CFO Tires....

Question 8

Hillary is a cash-basis calendar-year taxpayer. During the last week of December she received a letter containing a $5,000 check for services. Which of the following is a true statement?

Accepted Answer

A)  Hillary is taxed on the $5,000 of service income in the year she cashes the check. 
B)  Hillary is taxed on the $5,000 of service income in the year the check was mailed. 
C)  Hillary is taxed on the $5,000 of service income in the year she receives the check. 
D)  Hillary is taxed on the $5,000 of service income in the year she provides the services. 
E)  None of these is true. 
A)  Hillary is taxed on the $5,000 of service income in the year she cashes the check. 
B)  Hillary is taxed on the $5,000 of service income in the year the check was mailed. 
C)  Hillary is taxed on the $5,000 of service income in the year she receives the check. 
D)  Hillary is taxed on the $5,000 of service income in the year she provides the services. 
E)  None of these is true.

Question 9

Dave is a plumber who uses the cash method of accounting. This year Dave requested that his clients make their checks payable to his son, Steve. This year Steve received checks in the amount of $62,000 for Dave's plumbing services. Which of the following is a true statement?

Accepted Answer

A)  Dave is taxed on $62,000 of plumbing income this year. 
B)  Steve is taxed on $62,000 of plumbing income this year. 
C)  Steve is taxed on $62,000 of income from gifts received this year. 
D)  Dave may deduct the $62,000 received by Steve. 
E)  All of these are true 
A)  Dave is taxed on $62,000 of plumbing income this year. 
B)  Steve is taxed on $62,000 of plumbing income this year. 
C)  Steve is taxed on $62,000 of income from gifts received this year. 
D)  Dave may deduct the $62,000 received by Steve. 
E)  All of these are true

Question 10

Recognized income may be in the form of cash or property received (but not services received).

Accepted Answer

A) True 
 B)False

Question 11

Frank received the following benefits from his employer this year. What amount must Frank include in his gross income? $$\begin{array} { l r } 
\underline{\text { Benefits Received } }& \underline{\text { Amount }} \
\text { Salary } & \$ 54,450 \
\text { Health insurance } & 2,900 \
\text { Group term life insurance } ( \$ 50,000 ) & 1,800
\end{array}$$

Accepted Answer

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

Trevor received a gift of $25,000 in cash from his rich uncle. Trevor must include $15,000 of this gift in his gross income this year.

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?

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?

The assignment of income doctrine requires that to shift income from property to another person, the taxpayer must transfer only the income to the other person.

Hillary is a cash-basis calendar-year taxpayer. During the last week of December she received a letter containing a $5,000 check for services. Which of the following is a true statement?

Dave is a plumber who uses the cash method of accounting. This year Dave requested that his clients make their checks payable to his son, Steve. This year Steve received checks in the amount of $62,000 for Dave's plumbing services. Which of the following is a true statement?

Recognized income may be in the form of cash or property received (but not services received).

Frank received the following benefits from his employer this year. What amount must Frank include in his gross income? Salary \ 54,450 Health insurance 2,900 Group term life insurance (\ 50,000) 1,800

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

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Investments

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

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Exam 5: Gross Income and Exclusions

Trevor received a gift of $25,000 in cash from his rich uncle. Trevor must include $15,000 of this gift in his gross income this year.

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?

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?

The assignment of income doctrine requires that to shift income from property to another person, the taxpayer must transfer only the income to the other person.

Hillary is a cash-basis calendar-year taxpayer. During the last week of December she received a letter containing a $5,000 check for services. Which of the following is a true statement?

Dave is a plumber who uses the cash method of accounting. This year Dave requested that his clients make their checks payable to his son, Steve. This year Steve received checks in the amount of $62,000 for Dave's plumbing services. Which of the following is a true statement?

Recognized income may be in the form of cash or property received (but not services received).

Frank received the following benefits from his employer this year. What amount must Frank include in his gross income? Salary \ 54,450 Health insurance 2,900 Group term life insurance (\ 50,000) 1,800

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

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Investments

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Filters