Exam 4: Gross Income: Exclusions

Upon the sale of property,a portion of the selling price equal to the basis in the property is considered a return of capital to the seller and is,therefore,not taxable.

Discuss briefly the options available for avoiding double taxation for the U.S.citizen earning income from sources outside the United States.

Bret carries a $200,000 insurance policy on his life and has paid premiums of $10,000 over the years.Dividends on the policy have totaled $8,500.Each year Bret has left the dividends with the insurance company.In the current year,the insurance company credited $800 of interest on the accumulated dividends to Bret's account.In addition,$600 of dividends was added by the insurance company.In the current year,Bret must report income of

Awards for emotional distress attributable to a physical injury are excluded from gross income.

Hope receives an $18,500 scholarship from State University.The university specifies that $8,500 is for tuition,books,supplies,and equipment,while $10,000 is for room and board.In addition,Hope works part-time at the campus library and earns $5,000.Hope's gross income is

Jamal,age 52,is a human resources manager for Triple W Company.His annual salary is $110,000 and he receives the following fringe benefits during the current year: • Triple W pays for all employees' health and accident insurance.Triple W pays $7,000 for Jamal's health insurance during the year. • Triple W provides Jamal with group-term life insurance coverage of $200,000 during the year.The monthly inclusion amount per $1,000 of coverage is $.23. • Triple W has a flexible benefits plan in which employees may participate to pay any qualifying medical costs not reimbursed by their health insurance.Jamal has $1,600 withheld from his salary under the plan.During the year he receives reimbursements of $1,300. • Triple W pays parking costs for all management employees.Jamal's parking costs $220 a month. • Triple W pays Jamal's annual membership dues of $450 to the Society of Human Resource Management Association.The company also subscribes to several management journals for Jamal costing $650 a year. • Jamal took a college class on financial accounting and Triple W reimbursed his tuition of $6,000 through its tuition assistance program for all employees. • Jamal's consumption of coffee provided by Triple W is estimated at $250 a year. How much income must Jamal report from his job?

John,an employee of a manufacturing company,suffered a heart attack and was unable to work for six months.He received $1,500 per month of disability benefits as a result of an employer-provided group policy.The benefits are includible in John's gross income.

"No additional cost" benefits are excluded from an employee's gross income if the services are the same type that are sold to customers and in the line of business in which the employee works.

Ahmad's employer pays $10,000 in tuition this year for Ahmad to attend a graduate business program.How much of the employer-provided tuition is taxable to Ahmad?

Chloe receives a student loan from a foundation which encourages students to pursue teaching careers.Under the terms of the loan,Chloe will not have to repay the loan if she teaches in a public school for ten years.What tax issues should Chloe consider?

All of the following are requirements for excluding employee achievement awards except for

In 2015 Bonnie,a sole proprietor,loaned her employee,John,$10,000 to help him buy a car.In 2017,before he repaid the $10,000,Bonnie told John that she was "tearing up" the $10,000 note in recognition of his strong job performance.How should John treat the amount forgiven?

Meals may be excluded from an employee's gross income provided they are furnished on the employer's business premises and are for the convenience of the employee.

All of the following items are excluded from gross income except

Which of the following items will result in an increase in gross income?

Martina,who has been employed by the Smythe Corporation for ten years,receives a $400 watch as a length of service award in a meaningful presentation.The fair value of the watch is taxable.