Exam 4: Gross Income: Exclusions

Brad suffers from congestive heart failure and has been admitted to a nursing home where he is expected to spend the remainder of his life.His doctor has certified him as chronically ill.In 2017,Brad receives $320 per day from his life insurance policy for 100 days ($32,000) as accelerated death benefits.Brad's nursing home care costs $300 per day ($30,000 for the 100 days of care).Brad will be allowed to exclude

The fair value of lodging cannot be excluded from gross income unless the employee is required to accept the lodging as a condition of employment.

Which of the following statements regarding qualified tuition programs is incorrect?

Greg is the owner and beneficiary of a $100,000 policy on the life of his mother.Greg gives the policy to his brother,Don.Don subsequently pays premiums of $40,000.Upon his mother's death,how much of the insurance proceeds must Don include in income?

Britney is beneficiary of a $150,000 insurance policy on her father's life.Upon his death,she may elect to receive the proceeds in five yearly installments of $32,000 or may take the $150,000 lump sum.She elects to take the lump sum payment.What are the tax consequences in year one?

Accelerated death benefits from a life insurance policy received by a terminally ill person may be excluded from taxable income.

Elisa sued her former employer for discrimination.She was awarded $200,000 for lost wages,$30,000 for medical expenses related to emotional distress resulting from the discrimination,and $300,000 in punitive damages.The amount taxable is

Carl filed his tax return,properly claiming the head of household filing status.Carl's employer paid or provided the following to Carl: How much of this income should Carl report (assume benefits are provided on a nondiscriminatory basis)?

Dividends on life insurance policies are generally excludible income because they are considered a return of premium.

Chad and Jaqueline are married and have AGI of $150,000.In 2017 they adopted a child,while taking advantage of their employer's written adoption assistance program.The adoption cost $9,500,all of which was paid by the employer in accordance with the adoption plan.How much of the employer-paid adoption costs may be excluded from their income?

Premiums paid by an employer for employee disability coverage are excluded from the employee's gross income.

Bob,an employee of Modern Corp.,receives a fringe benefit (in lieu of a salary increase) of $1,000.Bob is in a 33% tax bracket.The fringe benefit is nontaxable to Bob.If he had instead paid for the benefit out of his own money,the cost would not be deductible.Bob's after-tax savings from receiving the tax-free benefit is

The amount of cash fringe benefits received under a cafeteria plan is taxable to an employee.

Jan has been assigned to the Rome office of ABC Corporation.She arrives in Rome on November 1,2016 and does not return to the United States until March 5,2018.During her stay in Rome,Jan earned $112,000 in 2017.Jan may exclude

Michael is an employee of StayHere Hotels,Inc.in Washington,DC.On his vacation,Michael travels to San Francisco and stays at a StayHere Hotel for six nights free of charge.The regular rate for a hotel room at StayHere in San Francisco is $300 a night.His ability to stay in the hotel without charge is based on the availability of empty rooms.How much income must Michael report due to the use of the San Francisco hotel room?

In the case of foreign-earned income,U.S.citizens may avoid double taxation of income by both the United States and the host country by utilizing a foreign tax credit or by electing the foreign earned income exclusion.

Which of the following is not excluded from income?

Sarah receives a $15,000 scholarship from City University.The university specifies that $8,000 is for tuition,books,supplies,and equipment for classes.The other $7,000 is for room and board.Sarah works ten hours per week as a grader,for which she is paid $7,500 for the year.Of the total amount received,Sarah must include the following amount in gross income

All of the following fringe benefits paid for by the employer may be excluded from an employee's gross income except

The discharge of certain student loans is excluded from income if all of the following are present except for