Exam 2: Gross Income and Exclusions

Peter is required by his divorce agreement to pay alimony of $4,000 a month and child support of $6,000 a month to his ex-wife Stella. What is the tax treatment of these two payments? To Peter? To Stella?

Under a divorce agreement executed in the current year, periodic payments of either cash or property must be made at regular intervals to be deductible as alimony.

Which of the following is generally excluded from gross income?

As a new benefit to employees, the Acme Company is providing a dining allowance every Tuesday for use in one of the twenty restaurants that they own around town. Should this benefit be included in the wages of the employees?

In the tax law, the definition of gross income is:

Basketball superstar Steph Curry's outstanding player award is not includible in income, since the award is in recognition of his outstanding performance.

Geoff is a company president who has had a very good year at work. The owner of the company is pleased and gives him a gift of $50,000 at the end of the year. The owner writes "gift" in the memo section of the check. How much of the gift is taxable to Geoff?

Child support payments are deductible by the spouse making the payments.

Interest income received by a cash basis taxpayer is generally reported in the tax year it is received.

Karina receives a scholarship of $10,000 to a college. She is also given a job which pays $5,000 a year to help with her expenses. $7,000 of the scholarship is earmarked for tuition and $3,000 is for room and board. How much of the money from the scholarship and the job are taxable to Karina?

Which of the following is excluded from gross income?

Under a divorce agreement executed in 2013, Bob is required to pay his ex-wife, Carol, $3,000 a month until their youngest daughter is 21 years of age. At that time, the required payments are reduced to $2,000 per month. a.How much of each $3,000 payment may be deducted as alimony by Bob? b.How much of each $3,000 payment must be included in Carol's taxable income?

A scholarship for room and board granted in 2016 is fully taxable to the recipient.

Which of the following fringe benefits is taxable to the employee receiving the benefit?

Indicate whether each of the items listed below would be (a) included in gross income or (b) excluded from gross income for the 2016 tax year. -Municipal bond interest

A "no-additional-cost" service includes only those services in the major line of business in which the employee is employed.

Interest on U.S. Treasury Bonds is not taxable.

Nicole is a student at USB Law School; she receives a $52,000 scholarship for 2016. Of the $52,000, $40,000 is used for tuition, $5,000 is used for books, and $7,000 is used for room and board. How much of the scholarship is excluded from taxable income for Nicole in 2016?

In 2016, Uriah received the following interest payments: ​ Interest of $300 on an overpayment of 2015 Federal income taxes Interest of $400 from his bank certificate of deposit. Interest of $1,000 on municipal bonds Interest of $1,500 on United States savings bonds (Series HH) ​ What amount, if any, should Uriah report as taxable interest income on his 2016 individual income tax return?

Interest earned on bonds issued by a state government is fully taxable.