Question 1

Each year a taxpayer must include in gross income the rental value of his or her personal residence.

Accepted Answer

A) True 
 B)False

Question 2

A business provides $45,000 of group-term life insurance to all workers,including the partners who work in the business.All of the workers can exclude the value of this fringe benefit from their gross income.

Accepted Answer

A) True 
 B)False

Question 3

Tim earns a salary of $40,000.This year,Tim's employer establishes a cafeteria plan under which Tim signed a salary reduction of $2,500 for which $1,500 is to cover his health insurance premiums and $1,000 is transferred to a flexible spending account to reimburse medical expenses.During the year,he is reimbursed $900 for medical expenses.What is the total taxable to Tim this year?

Accepted Answer

A)  $37,500 
B)  $37,600 
C)  $38,400 
D)  $40,000 
A)  $37,500 
B)  $37,600 
C)  $38,400 
D)  $40,000

Question 4

Which of the following benefits provided by an employer is subject to withholding and must be reported on the employee's W-2?

Accepted Answer

A)  payment of an employee's professional dues 
B)  meals provided on the premises for the employer's convenience 
C)  $400 cash award for long-term service, awarded at a special employee awards event 
D)  None of the above. 
A)  payment of an employee's professional dues 
B)  meals provided on the premises for the employer's convenience 
C)  $400 cash award for long-term service, awarded at a special employee awards event 
D)  None of the above.

Question 5

This year,Jonathan sold some qualified small business stock that he acquired in December 2010.His basis in the stock was $100,000 and he sold it for a $300,000 gain.How much of Jason's gain is taxable?

Accepted Answer

A)  $0 
B)  $300,000 
C)  $150,000 
D)  $75,000 
A)  $0 
B)  $300,000 
C)  $150,000 
D)  $75,000

Question 6

Cameron is the owner and beneficiary of a $300,000 policy on the life of his mother.Cameron sells the policy to his brother,Parker,for $100,000.Parker subsequently pays premiums of $55,000.Upon his mother's death,how much of the insurance proceeds must Parker include in income?

Accepted Answer

A)  $0 
B)  $55,000 
C)  $145,000 
D)  $300,000 
A)  $0 
B)  $55,000 
C)  $145,000 
D)  $300,000

Question 7

Exter Company is experiencing financial difficulties.It has assets worth $2 million,but owes liabilities of $2.1 million.It has a longstanding relationship with the bank.The bank has agreed to forgive $300,000 of debt principal.Because of this debt forgiveness,Exter will recognize income of

Accepted Answer

A)  $0. 
B)  $100,000. 
C)  $200,000. 
D)  $300,000. 
A)  $0. 
B)  $100,000. 
C)  $200,000. 
D)  $300,000.

Question 8

For a taxpayer who is not insolvent nor under bankruptcy proceedings,the discharge of debt is generally

Accepted Answer

A)  taxable. 
B)  nontaxable. 
C)  partially taxable. 
D)  None of the above. 
A)  taxable. 
B)  nontaxable. 
C)  partially taxable. 
D)  None of the above.

Question 9

Rick chose the following fringe benefits under his employer's cafeteria plan.Which of his chosen benefits will be taxable?

Accepted Answer

A)  $150 cash per pay period 
B)  medical insurance on his family 
C)  dental insurance 
D)  group term life insurance coverage of $20,000 
A)  $150 cash per pay period 
B)  medical insurance on his family 
C)  dental insurance 
D)  group term life insurance coverage of $20,000

Question 10

Joe Black,a police officer,was injured in the line of duty.He received the following during the current year:
 
What is the amount that is taxable?

Accepted Answer

A)  $57,000 
B)  $66,000 
C)  $71,000 
D)  $84,000 
A)  $57,000 
B)  $66,000 
C)  $71,000 
D)  $84,000

Question 11

Amounts collected under accident and health insurance policies purchased by the taxpayer are excludible from income.

Accepted Answer

A) True 
 B)False

Question 12

In September of 2017,Michelle sold shares of qualified small business stock for $1,000,000 that had a basis of $200,000.She had held the stock for 17 months.Forty-five days after the sale she purchased other qualified small business stock for $1,100,000.What is the basis in the new stock she purchased?

Accepted Answer

A)  $200,000 
B)  $300,000 
C)  $800,000 
D)  $1,100,000 
A)  $200,000 
B)  $300,000 
C)  $800,000 
D)  $1,100,000

Question 13

In 2006,Gita contributed property with a basis of $500,000 and a fair market value of $3,000,000 to a qualified small business corporation for all of its common stock.She sells the stock in 2017 for $4,000,000.
a.What is the amount of taxable gain on the transaction?
b.Assume instead that the stock was acquired in December 2010.What is the amount of the taxable gain?

Accepted Answer

a.The amount of the realized gain is $4,

Question 14

Nondiscrimination requirements do not apply to working condition fringe benefits.

Accepted Answer

A) True 
 B)False

Question 15

Melanie,a U.S.citizen living in Paris,France,for the last three years,earns a salary of $125,000 in 2017.Melanie's housing costs are $24,000 per year,which is reasonable.How much can Melanie exclude from income?

Accepted Answer

A)  $118,436 
B)  $102,100 
C)  $109,764 
D)  $149,000 
A)  $118,436 
B)  $102,100 
C)  $109,764 
D)  $149,000

Question 16

Tonya's employer pays the full premium on a disability income policy from an insurance company on behalf of all employees.After a skiing accident,Tonya was out of work for three months and collected $2,000 per month ($6,000 total) of disability benefits from this policy.In addition,Tonya received another $1,000 per month ($3,000 total) from a disability policy she had purchased herself.Tonya had paid a total of $1,300 in premiums on her policy.How much of the $9,000 total received is taxable?

Accepted Answer

A)  $9,000 
B)  $6,000 
C)  $7,700 
D)  $3,000 
A)  $9,000 
B)  $6,000 
C)  $7,700 
D)  $3,000

Question 17

Sumedha is the beneficiary of her mother's $500,000 life insurance policy.She receives $54,000 per year over ten years in settlement of her mother's policy.Sumedha will exclude the $54,000 proceeds received each year from the life insurance company.

Accepted Answer

A) True 
 B)False

Question 18

All payments made by an employer to the family of a deceased employee are excluded from the recipient's gross income regardless of the reason for payment.

Accepted Answer

A) True 
 B)False

Question 19

Fatima's employer funds child care for all employees' children.She pays nothing for this service.The cost of Fatima's child care is $7,200 a year.How much of the child care benefits are taxable to Fatima?

Accepted Answer

A)  $0 
B)  $2,200 
C)  $5,000 
D)  $7,200 
A)  $0 
B)  $2,200 
C)  $5,000 
D)  $7,200

Question 20

A nursing home maintains a cafeteria that is used by employees,patients,and visitors.The value of free meals provided to employees while on duty so that they may be available for emergency calls is not taxable.

Accepted Answer

A) True 
 B)False

Each year a taxpayer must include in gross income the rental value of his or her personal residence.

A business provides $45,000 of group-term life insurance to all workers,including the partners who work in the business.All of the workers can exclude the value of this fringe benefit from their gross income.

Which of the following benefits provided by an employer is subject to withholding and must be reported on the employee's W-2?

This year,Jonathan sold some qualified small business stock that he acquired in December 2010.His basis in the stock was $100,000 and he sold it for a $300,000 gain.How much of Jason's gain is taxable?

Cameron is the owner and beneficiary of a $300,000 policy on the life of his mother.Cameron sells the policy to his brother,Parker,for $100,000.Parker subsequently pays premiums of $55,000.Upon his mother's death,how much of the insurance proceeds must Parker include in income?

Exter Company is experiencing financial difficulties.It has assets worth $2 million,but owes liabilities of $2.1 million.It has a longstanding relationship with the bank.The bank has agreed to forgive $300,000 of debt principal.Because of this debt forgiveness,Exter will recognize income of

For a taxpayer who is not insolvent nor under bankruptcy proceedings,the discharge of debt is generally

Rick chose the following fringe benefits under his employer's cafeteria plan.Which of his chosen benefits will be taxable?

Joe Black,a police officer,was injured in the line of duty.He received the following during the current year: What is the amount that is taxable?

Amounts collected under accident and health insurance policies purchased by the taxpayer are excludible from income.

Nondiscrimination requirements do not apply to working condition fringe benefits.

Melanie,a U.S.citizen living in Paris,France,for the last three years,earns a salary of $125,000 in 2017.Melanie's housing costs are $24,000 per year,which is reasonable.How much can Melanie exclude from income?

Sumedha is the beneficiary of her mother's $500,000 life insurance policy.She receives $54,000 per year over ten years in settlement of her mother's policy.Sumedha will exclude the $54,000 proceeds received each year from the life insurance company.

All payments made by an employer to the family of a deceased employee are excluded from the recipient's gross income regardless of the reason for payment.

Fatima's employer funds child care for all employees' children.She pays nothing for this service.The cost of Fatima's child care is $7,200 a year.How much of the child care benefits are taxable to Fatima?

A nursing home maintains a cafeteria that is used by employees,patients,and visitors.The value of free meals provided to employees while on duty so that they may be available for emergency calls is not taxable.

An Introduction to Taxation

Determination of Tax

Gross Income: Inclusions

Property Transactions: Capital Gains and Losses

Deductions and Losses

Itemized Deductions

Losses and Bad Debts

Employee Expenses and Deferred Compensation

Depreciation, cost Recovery, amortization, and Depletion

Accounting Periods and Methods

Property Transactions: Nontaxable Exchanges

Property Transactions: Sec1231 and Recapture

Special Tax Computation Methods, tax Credits, and Payment of Tax

Tax Research

Corporations

Partnerships and S Corporations

Taxes and Investment Planning

Filters

Exam 4: Gross Income: Exclusions

Each year a taxpayer must include in gross income the rental value of his or her personal residence.

A business provides $45,000 of group-term life insurance to all workers,including the partners who work in the business.All of the workers can exclude the value of this fringe benefit from their gross income.

Which of the following benefits provided by an employer is subject to withholding and must be reported on the employee's W-2?

This year,Jonathan sold some qualified small business stock that he acquired in December 2010.His basis in the stock was $100,000 and he sold it for a $300,000 gain.How much of Jason's gain is taxable?

Cameron is the owner and beneficiary of a $300,000 policy on the life of his mother.Cameron sells the policy to his brother,Parker,for $100,000.Parker subsequently pays premiums of $55,000.Upon his mother's death,how much of the insurance proceeds must Parker include in income?

Exter Company is experiencing financial difficulties.It has assets worth $2 million,but owes liabilities of $2.1 million.It has a longstanding relationship with the bank.The bank has agreed to forgive $300,000 of debt principal.Because of this debt forgiveness,Exter will recognize income of

For a taxpayer who is not insolvent nor under bankruptcy proceedings,the discharge of debt is generally

Rick chose the following fringe benefits under his employer's cafeteria plan.Which of his chosen benefits will be taxable?

Joe Black,a police officer,was injured in the line of duty.He received the following during the current year: What is the amount that is taxable?

Amounts collected under accident and health insurance policies purchased by the taxpayer are excludible from income.

Nondiscrimination requirements do not apply to working condition fringe benefits.

Melanie,a U.S.citizen living in Paris,France,for the last three years,earns a salary of $125,000 in 2017.Melanie's housing costs are $24,000 per year,which is reasonable.How much can Melanie exclude from income?

Sumedha is the beneficiary of her mother's $500,000 life insurance policy.She receives $54,000 per year over ten years in settlement of her mother's policy.Sumedha will exclude the $54,000 proceeds received each year from the life insurance company.

All payments made by an employer to the family of a deceased employee are excluded from the recipient's gross income regardless of the reason for payment.

Fatima's employer funds child care for all employees' children.She pays nothing for this service.The cost of Fatima's child care is $7,200 a year.How much of the child care benefits are taxable to Fatima?

A nursing home maintains a cafeteria that is used by employees,patients,and visitors.The value of free meals provided to employees while on duty so that they may be available for emergency calls is not taxable.

An Introduction to Taxation

Determination of Tax

Gross Income: Inclusions

Property Transactions: Capital Gains and Losses

Deductions and Losses

Itemized Deductions

Losses and Bad Debts

Employee Expenses and Deferred Compensation

Depreciation, cost Recovery, amortization, and Depletion

Accounting Periods and Methods

Property Transactions: Nontaxable Exchanges

Property Transactions: Sec1231 and Recapture

Special Tax Computation Methods, tax Credits, and Payment of Tax

Tax Research

Corporations

Partnerships and S Corporations

Taxes and Investment Planning

Filters