Exam 2: Gross Income and Exclusions

State whether each of the following is taxable or nontaxable. a.Susan won a jackpot of $50,000 gambling at a casino. b.Sarah received a Christmas ham from her employer. c.Jonathan won a car in a supermarket raffle valued at $25,000. d.Gary received a scholarship for tuition of $5,000 a year. e.Eric is given lodging valued at $1,000 a month on the oil rig where he is employed since it is impossible for Eric to go home during the period of time he is assigned to work on the rig.

Steve and Laura were divorced in 2012.Laura pays Steve alimony of $1,200 a month.The payment amount was agreed upon in the decree of divorce.To save money, Steve and Laura still live together.Are the alimony payments that Steve receives in 2018 included in his income?

Marie had a good year.She received the following prizes and awards:- an iPad from The Famous Daytime Talk Show with a fair market value of $500- lottery winnings of $1,000 received in cash- a plaque worth $25 plus $100 of Godiva chocolate in recognition for 100 days on the job without an accident- a $10,000 cash prize from American IdolHow much of her prizes and awards should Marie report on her tax return?

Disability benefits are generally taxable to the individual receiving the amounts.

Cash allowances for meals or lodging generally must be included in the employee's income.

Mary received the following items during the current year: Christmas bonus from her employer \6 00 Christmas gift from her father \1 00 Unemployment compens ation \3 5 What is the total amount of the above items that must be included in Mary's current year gross income?

In which of the following cases may the employee exclude the meals and/or lodging:

Susie received unemployment benefits in the current year.

Which of the following is generally excluded from gross income?

Patricia and Cliff are married but file separate tax returns.Patricia received a salary of $42,000 and Cliff received $15,000 of dividends from a stock portfolio that is his own separate property. a.​If Patricia and Cliff live in a common law state, what income should Patricia show on her separate return?​Salary​​Dividends​​ b.​If they live in California (a community property state), what income should Patricia show on her separate return?​Salary​​Dividends​

All of the following amounts are taxable income to the recipient except:

Child support payments are deductible by the spouse making the payments.

Tracy transfers to Glen a life insurance policy with a face value of $40,000 and a cash value of $8,000 in payment of a personal debt.Glen continues to make premium payments on the policy until Tracy's death.At that time, Glen had paid $3,500 in premiums. a.How much income must Glen report when he receives the $40,000 in proceeds? b.​Would your answer be different if Tracy were a shareholder and CEO of a corporation to which the policy was transferred? Why?

Qualified dividends are given special tax treatment.Describe how they are taxed in 2018.

As part of the property settlement related to their 2018 divorce, Stella must give Peter the house that they have been living in, while she gets 100 percent of their savings accounts.The house was purchased in Texas 15 years ago for $100,000 and is now worth $110,000.How much gain must Stella recognize on the transfer of the house to Peter? What is Peter's tax basis in the house for calculating any future sale of the house?

For the current year, the maximum percentage of Social Security benefits which might be included in a taxpayer's gross income is?

In 2018, Uriah received the following interest payments:Interest of $300 on an overpayment of 2017 Federal income taxesInterest of $400 from his bank certificate of deposit.Interest of $1,000 on municipal bondsInterest of $1,500 on US savings bonds (Series HH)What amount, if any, should Uriah report as taxable interest income on his 2018 individual income tax return?

Tim, a single taxpayer, receives $500 of qualified dividends from Exxon in the current year.His taxable income before the dividends is $26,000.Tim's tax on the dividends will be:

Roger is required under a 2012 divorce decree to pay $500 of alimony and $200 of child support per month for 12 years.In addition, Roger makes a voluntary payment of $100 per month.How much of the total monthly payment is deductible by Roger?

The receipt of an inheritance is excluded from the taxable income of the recipients.