Exam 19: Gross Income: Inclusions

Natasha is a single taxpayer with a 28% marginal tax rate.She received distributions of earnings this year as follows: How much of the $6,000 distribution will be taxed at the 15% tax rate?

A taxpayer had the following income and losses in the current year: What is the taxpayer's adjusted gross income?

Interest on the obligations of the U.S.government,states,territories,and U.S.possessions and their political subdivisions are tax-exempt.

Aaron found a prototype of a new pair of glasses with Internet service and other computing capabilities while in a bar one evening.He offered the prototype to the owner of a magazine and blog that reviews new digital devices.The owner paid Aaron $10,000 in return for the prototype.What tax issues should Aaron consider?

Alex is a calendar-year sole proprietor.He began business on December 1,this year.He uses the accrual method of accounting.Alex had the following collections in December: • Collected $7,000 in December,from clients who paid cash for services to be performed next year. • Collected $5,000 in December,for services performed during December; deposited in an operating account on December 31,this year. • Collected $12,000 in December; on accounts receivable for services performed in December; deposited in operating account on January 2,next year. What is the amount Alex must include in his income for December?

Homer Corporation's office building was destroyed by fire.Homer collected insurance of $250,000,which equaled the building's basis,and $150,000 for profits lost during the time the company was rebuilding the office building.What is the amount taxable this year?

Which of the following bonds do not generate tax-exempt federal income?

Child support is

Which one of the following items is not considered gross income for tax purposes?

Internal Revenue Code Section 61 provides an inclusive list of all possible items taxed under the Code.

Jeannie,a single taxpayer,retired during the year,to take over the management of some rental property.She had the following items of income and expense: What is Jeannie's adjusted gross income for the year?

If a taxpayer's method of accounting does not clearly reflect income,the IRS may specify a different accounting method which must be used by the taxpayer.

Carla redeemed EE bonds which qualify for the educational exclusion.The redemption consisted of $14,000 principal and $6,000 interest.The net qualifying educational expenses are $10,000.Her AGI is below the threshold for phase-out of the exclusion.The taxable interest is

Tyler has rented a house from Camarah since last year.The rent is usually $1,200 per month,but Camarah reduced the monthly rent down to $200 for all twelve months this year in exchange for Tyler putting in an inground pool in the backyard.The improvement has a fair market value of $20,000.How much total rental income must Camarah report this year?

While certain income of a minor is taxed at the parent's tax rate,discuss how income shifting may still be accomplished and any constraints that may exist on income shifting.

Jan purchased an antique desk at auction.For two years,the desk sat in Jan's garage until she decided to restore it.This year,while cleaning and restoring the desk,Jan discovered $1,500 in a hidden compartment inside one drawer.With respect to the $1,500,Jan must

A taxpayer may not avoid responsibility for payment of income taxes by assigning the income to a third party.

Mark purchased 2,000 shares of Darcy Corporation for $13,200.This year,Darcy declared a 10% nontaxable stock dividend,and Mark received 200 shares.After the dividend Mark's per share basis will be

CT Computer Corporation,a cash-basis taxpayer,sells service contracts on the computers it sells.At the beginning of January of this year,CT Corporation sold contracts with service to begin immediately: The amount of income CT Corporation must report for this year is

With respect to alimony and property settlements in a divorce or separation,all of the following are true with the exception of