Exam 19: Gross Income: Inclusions

During 2016,Christiana's employer withheld $1,500 from her wages for state income taxes.She claimed the $1,500 as an itemized deduction on her 2016 federal income tax return which included $9,000 of itemized deductions.Christiana is single.On her 2016 state income tax return,her state income tax was $900.As a result,Christiana received a $600 refund in 2017.What amount must Christiana include in income in 2017?

In community property states,income from separate property owned before marriage is always considered separate income after marriage.

Norah's Music Lessons Inc.is a calendar-year taxpayer using the accrual method of accounting.On October 1 of this year,the corporation received $1,200 for a one-year contract beginning on that date to provide 10 lessons.The company provided 6 lessons this year under the contract.How much should the corporation include in income this year with respect to this contract?

A key factor in determining tax treatment of distributions from qualified retirement plans is whether the employee made pre-tax or after-tax contributions.

Insurance proceeds received because of the destruction of property are

Natasha,age 58,purchases an annuity for $40,000.Natasha will receive $400 per month for the rest of her life.The expected return multiple is 20.0.At age 65,the amount that Natasha may exclude from income is

XYZ Corporation declares a 10 percent stock dividend distributable to all shareholders.There is only the one class of stock outstanding,and shareholders do not have any choices with respect to the distribution.Carol had owned 100 shares of stock,and she received 10 new shares as a result of the stock dividend.The stock is trading at $25 per share as of the distribution.Carol will recognize $250 of dividend income.

Under the accrual method of accounting,income is considered earned when all the events have occurred which fix the right to receive the income and when the amount of income can be determined with reasonable accuracy.

Norah,who gives music lessons,is a calendar-year taxpayer using the cash-basis method of accounting.On October 1 of this year,she received $1,200 for a one-year contract beginning on that date to provide 10 lessons.She gave 6 lessons this year.How much should Norah include in income this year?

An accrual-basis taxpayer receives advance payment for services to be provided over three future years.The taxpayer can recognize the income over the three-year period as services are provided,consistent with its financial statements.

Distributions from corporations to the shareholders in a nonliquidating distribution will usually be classified as a dividend up to the amount of the corporation's

Frank and Marion,husband and wife,file separate returns.Frank and Marion live in a common law state.Frank's salary is $42,000 and Marion's salary is $46,000.Marion receives dividend income of $4,000 from stock inherited from her parents.Frank receives interest income of $1,000 from bonds purchased with his salary after marriage.Frank and Marion receive $3,200 dividend income from stock they purchased jointly.Marion's income would be

Income from illegal activities is taxable.

The Cable TV Company,an accrual-basis taxpayer,allows its customers to pay by the month,by the year,or two years in advance.In December 2017,the company collected the following amounts applicable to future services: Assuming Cable TV wants to minimize income reported for 2016,what is the amount of gross income that must be reported for 2017 and how much of the income from these contracts will be reported in 2018?

Alimony is

Bridget owns 200 shares of common stock of Jones Corporation.During the current year,Jones gives its shareholders the choice of receiving cash of $2 per share or one additional share of Jones common stock for each 5 shares of stock owned.The stock has a fair market value of $10 per share.Bridget chooses to take the additional shares of stock.How much income does Bridget have from the stock dividend?

Alimony received is taxable to the recipient while child support payments are not.

"Gross income" is a key term in the tax law and is defined in IRC Sec.61.However,gross income is not reported on Form 1040.

Interest credited to a bank savings account is taxed regardless of whether or not it is withdrawn.

Interest on Series E and Series EE U.S.savings bonds need not be reported until the bonds mature.