Question 1

Susie received unemployment benefits in the current year.

Accepted Answer

A) All of the unemployment benefits are taxable. 
B) All of the unemployment benefits are non-taxable. 
C) Half of the unemployment benefits are taxable and half are non-taxable. 
D) The taxability of the unemployment benefits depends upon other income received for the year. 
A) All of the unemployment benefits are taxable. 
B) All of the unemployment benefits are non-taxable. 
C) Half of the unemployment benefits are taxable and half are non-taxable. 
D) The taxability of the unemployment benefits depends upon other income received for the year.

Question 2

Richard, who retired on April 30, 2016, receives a monthly employee annuity benefit of $1,400 payable for life, beginning May 1, 2016. During his years of employment, Richard contributed $29,400 to the company's plan. Richard's age on May 1 is 66. Using the simplified method, how much of the $11,200 annuity payment received during 2016 may Richard exclude from gross income?

Accepted Answer

A) $427 
B) $1,120 
C) $1,680 
D) $11,200 
E) None of the above 
A) $427 
B) $1,120 
C) $1,680 
D) $11,200 
E) None of the above

Question 3

Mable is a wealthy widow who has come to you for tax advice. She is in the 35 percent tax bracket. She has a choice between investing in a high-quality municipal bond paying 3.5 percent or a high-quality corporate bond paying 7 percent. From a tax standpoint, which investment would you advise her to make and why?

Accepted Answer

She should invest in the corporate bond.

Question 4

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.
-Lottery winnings

Accepted Answer

A) Included 
B) Excluded 
A) Included 
B) Excluded

Question 5

Steve worked as a tech supervisor for a computer company. In September of 2016, he was laid off. He was paid unemployment compensation for the rest of the year totaling $7,000. Which of the following is true?

Accepted Answer

A) Steve will have to report all $7,000 of the unemployment compensation as income. 
B) Steve will have to report $4,600 of the unemployment compensation as income. 
C) Unemployment compensation is never taxable. 
D) As long as the unemployment compensation payments are less than the taxpayer's previous salary, they are not taxable. 
E) None of the above is true. 
A) Steve will have to report all $7,000 of the unemployment compensation as income. 
B) Steve will have to report $4,600 of the unemployment compensation as income. 
C) Unemployment compensation is never taxable. 
D) As long as the unemployment compensation payments are less than the taxpayer's previous salary, they are not taxable. 
E) None of the above is true.

Question 6

Ordinarily life insurance proceeds are excluded from gross income. Why would they be taxable if the policy had been transferred for valuable consideration, prior to the death of the insured?

Accepted Answer

If a policy is transferred for valuable

Question 7

Dividend income arising from stock received as a gift is excluded from gross income since the dividends are considered part of the gift.

Accepted Answer

A) True 
 B)False

Question 8

Martin retired in May 2016. His pension is $1,000 per month from a qualified retirement plan to which he contributed $42,000, and to which his employer contributed $12,000. Martin was 67 when the plan payments started. During 2016, he received 8 months of payment for a total of $8,000 from the plan.
a.Using the simplified method, calculate Martin's taxable income for 2016 from the retirement plan distributions.
b.​
If Martin's contributions to the plan had been $25,200, instead of $42,000, using the simplified method, how much taxable income would he have to report in 2016 from the plan distributions?

Accepted Answer

The answer of Martin retired in May 2016. His pension...

Question 9

Tracy transfers to Glen a life insurance policy with a face value of $40,000 and a cash value of $8,000 in payment of a personal debt. Glen continues to make premium payments on the policy until Tracy's death. At that time, Glen had paid $3,500 in premiums.
a.How much income must Glen report when he receives the $40,000 in proceeds?
b.Would your answer be different if Tracy were a shareholder and CEO of a corporation to which the policy was transferred? Why?

Accepted Answer

a. $28,500 = $40,000 - $8,000

Question 10

​Which of the following are not excludable as an employee fringe benefit?

Accepted Answer

A) ​Employee deductions of $4,200 for dependent childcare expenses 
B) Premiums for up to $50,000 of group term life insurance 
C) ​An employee discount that permits the sale of merchandise to employees for just over cost 
D) ​Public transportation costs of $130 per month provided by the employer 
E) ​All of the above are excludable as an employee fringe benefit 
A) ​Employee deductions of $4,200 for dependent childcare expenses 
B) Premiums for up to $50,000 of group term life insurance 
C) ​An employee discount that permits the sale of merchandise to employees for just over cost 
D) ​Public transportation costs of $130 per month provided by the employer 
E) ​All of the above are excludable as an employee fringe benefit

Question 11

Qualified dividends are given special tax treatment. Describe how they are taxed.

Accepted Answer

Qualified dividends are taxed at 0 perce

Question 12

Steve and Laura were divorced in 2010. Laura pays Steve alimony of $1,200 a month. The payment amount was agreed upon in the decree of divorce. To save money, Steve and Laura still live together. Are the alimony payments that Steve receives in 2016 included in his income?

Accepted Answer

A) Yes, the payments meet all alimony payment requirements. 
B) Yes, alimony is always taxable. 
C) No, only some of it is tax-exempt because Laura pays Steve too much alimony. 
D) No, since Steve and Laura still live together, the payments are not considered alimony. 
E) Yes, alimony payments are not tax-exempt. 
A) Yes, the payments meet all alimony payment requirements. 
B) Yes, alimony is always taxable. 
C) No, only some of it is tax-exempt because Laura pays Steve too much alimony. 
D) No, since Steve and Laura still live together, the payments are not considered alimony. 
E) Yes, alimony payments are not tax-exempt.

Susie received unemployment benefits in the current year.

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. -Lottery winnings

Steve worked as a tech supervisor for a computer company. In September of 2016, he was laid off. He was paid unemployment compensation for the rest of the year totaling $7,000. Which of the following is true?

Ordinarily life insurance proceeds are excluded from gross income. Why would they be taxable if the policy had been transferred for valuable consideration, prior to the death of the insured?

Dividend income arising from stock received as a gift is excluded from gross income since the dividends are considered part of the gift.

Which of the following are not excludable as an employee fringe benefit?

Qualified dividends are given special tax treatment. Describe how they are taxed.

Steve and Laura were divorced in 2010. Laura pays Steve alimony of $1,200 a month. The payment amount was agreed upon in the decree of divorce. To save money, Steve and Laura still live together. Are the alimony payments that Steve receives in 2016 included in his income?

The Individual Income Tax Return

Business Income and Expenses Part I

Business Income and Expenses Part II

Itemized Deductions and Other Incentives

Credits and Special Taxes

Accounting Periods and Methods and Depreciation

Capital Gains and Losses

Withholding Estimated Payments and Payroll Taxes

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters

Exam 2: Gross Income and Exclusions

Susie received unemployment benefits in the current year.

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. -Lottery winnings

Steve worked as a tech supervisor for a computer company. In September of 2016, he was laid off. He was paid unemployment compensation for the rest of the year totaling $7,000. Which of the following is true?

Ordinarily life insurance proceeds are excluded from gross income. Why would they be taxable if the policy had been transferred for valuable consideration, prior to the death of the insured?

Dividend income arising from stock received as a gift is excluded from gross income since the dividends are considered part of the gift.

​Which of the following are not excludable as an employee fringe benefit?

Qualified dividends are given special tax treatment. Describe how they are taxed.

Steve and Laura were divorced in 2010. Laura pays Steve alimony of $1,200 a month. The payment amount was agreed upon in the decree of divorce. To save money, Steve and Laura still live together. Are the alimony payments that Steve receives in 2016 included in his income?

The Individual Income Tax Return

Business Income and Expenses Part I

Business Income and Expenses Part II

Itemized Deductions and Other Incentives

Credits and Special Taxes

Accounting Periods and Methods and Depreciation

Capital Gains and Losses

Withholding Estimated Payments and Payroll Taxes

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters

Which of the following are not excludable as an employee fringe benefit?