Exam 2: Gross Income and Exclusions

Bob is a machinist in a remote Alaskan crab-freezing plant.The plant is accessible only by boat or airplane and has no available lodging for rent.Bob's employer provides him with lodging at the plant and pays for all of his electricity, gas, and other utilities, valued at $700 per month.Is the value of the lodging taxable to Bob? Explain.

Curt's tax client, Terry, is employed at a large company that offers health care flexible spending accounts to its employees.Terry must decide at the beginning of the year whether he wants to put as much as $2,650 of his salary into the medical flexible spending account.Terry has excellent insurance through the company and is very healthy.He does not expect to have any medical expenses during the year.Terry does not itemize deductions.Should Curt recommend that Terry put the maximum in his health care flexible spending account? Why or why not?

Which of the following is correct?

Which of the following gifts or prizes would be considered taxable income to the person receiving the gift?

Awards, bonuses, and gifts are all included in gross income.

Indicate whether each of the items listed below would be (a) included in gross income or (b) excluded from gross income for the 2018 tax year. a.Included b.Excluded -Lottery winnings

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.

Taxpayers must report interest income on Series EE savings bonds as the interest accrues.

Which of the following is nontaxable income to the recipient for tax purposes?

Indicate whether each of the items listed below would be (a) included in gross income or (b) excluded from gross income for the 2018 tax year. a.Included b.Excluded -Unemployment compensation

Barry has a successful methamphetamine laboratory.Producing methamphetamine is illegal under federal law.Is Barry required by law to report the income from his lab on his tax return? Why?

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 programHow much income must Henry report on his tax return?

Lee and Pat are married taxpayers living in Louisiana.Lee earns wages of $40,000 and has $5,000 of dividend income from separate property.Lee and Pat have interest income from community property of $10,000.If Lee and Pat file separate income tax returns, what amount of income must be included on Lee's separate tax return?

Nicole is a student at USB Law School; she receives a $52,000 scholarship for 2018.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 2018?

As a new benefit to employees, the Acme Company is providing a dining allowance every Tuesday for use in one of the twenty restaurants that they own around town.Should this benefit be included in the wages of the employees?

In regards to Social Security benefits:

In the tax law, the definition of gross income is:

In all community property states, income from community property is community income.

Interest on US Treasury Bonds is not taxable.

Which of the following is not a true statement regarding community property law?