Question 1

There are some instances where a cash-basis taxpayer can report income as though he or she is an accrual basis taxpayer.

Accepted Answer

A) True 
 B)False

Question 2

Determine the amount of tax liability under the following two situations.
1. The taxpayer is single with taxable income of $54,690 that includes qualified dividends of $450.
2. The taxpayer is married filing jointly with taxable income of $64,500 that includes qualified dividends of $300.

Accepted Answer

Answers: are rounded to the nearest doll

Question 3

Are life insurance proceeds taxable to the recipient?

Accepted Answer

Life insurance proceeds payable because

Question 4

Discounts offered to employees on services cannot exceed ________ of the normal selling price.

Accepted Answer

A)  75% 
B)  5% 
C)  20% 
D) 10% 
A)  75% 
B)  5% 
C)  20% 
D) 10%

Question 5

Constructive receipt means the income is available to or in the control of the taxpayer regardless of whether the taxpayer chooses to utilize the income.

Accepted Answer

A) True 
 B)False

Question 6

Items that must be reported on line 21 (Other Income) of the Form 1040 include:

Accepted Answer

A)  Wages. 
B)  Jury duty pay. 
C)  Capital gains. 
D) Tax-exempt dividends. 
A)  Wages. 
B)  Jury duty pay. 
C)  Capital gains. 
D) Tax-exempt dividends.

Question 7

Welfare payments received by a taxpayer must be reported in income.

Accepted Answer

A) True 
 B)False

Question 8

Interest on state bonds is tax-exempt if the bonds were issued for private activities, such as convention centers, industrial parks, or stadiums.

Accepted Answer

A) True 
 B)False

Question 9

Laura is a student at a state university. In 2015, she received a scholarship of $5,000 for tuition and fees and an assistantship for $3,000. What is the amount that Laura must report in income?

Accepted Answer

A)  $8,000. 
B)  $5,000. 
C)  $0. 
D) $3,000. 
A)  $8,000. 
B)  $5,000. 
C)  $0. 
D) $3,000.

Question 10

The following fringe benefit provided by the employer is not taxable to the employee:

Accepted Answer

A)  Vacation pay. 
B)  Employer-paid premiums on group-term life insurance with coverage of $40,000 per person. 
C)  Educational assistance for up to $10,000 per person. 
D) Sick pay. 
A)  Vacation pay. 
B)  Employer-paid premiums on group-term life insurance with coverage of $40,000 per person. 
C)  Educational assistance for up to $10,000 per person. 
D) Sick pay.

Question 11

Which one of the following items is not exempt under the umbrella of compensation for injuries or sickness?

Accepted Answer

A)  Payments received for damages as a result of personal physical injuries. 
B)  Employer-provided adoption assistance. 
C)  Payments received under workers' compensation acts. 
D) Disability income received from a terrorist attack in a foreign country while employed by the U.S. government. 
A)  Payments received for damages as a result of personal physical injuries. 
B)  Employer-provided adoption assistance. 
C)  Payments received under workers' compensation acts. 
D) Disability income received from a terrorist attack in a foreign country while employed by the U.S. government.

Question 12

If an employee receives a prize or award from his or her employer, the award is included in W-2 income.

Accepted Answer

A) True 
 B)False

Question 13

Lisa performed bookkeeping services for Donald charging him $650. Donald agreed that he would pay Lisa's credit card bill for the same amount. Lisa has received an economic benefit and must report $650 in income on her tax return.

Accepted Answer

A) True 
 B)False

Question 14

Receipt of property or services does not trigger income recognition for tax purposes.

Accepted Answer

A) True 
 B)False

Question 15

For most individuals, interest income comes from interest-earning deposits at banks, savings and loans, or credit unions.

Accepted Answer

A) True 
 B)False

Question 16

Does forgiveness of debt result in taxable income to the taxpayer (borrower)?

Accepted Answer

Generally, if a lender fully or partiall

Question 17

For tax purposes, name the three conditions that a transaction must meet for income recognition.

Accepted Answer

A transaction is recognized as

Question 18

Payments received under workers' compensation acts are taxable to the recipient.

Accepted Answer

A) True 
 B)False

Question 19

If Tom, an accountant, agrees to provide accounting services to Fred, a friend, in exchange for Fred fixing Tom's office floor, then:

Accepted Answer

A)  Both of them must report income on their tax returns. 
B)  Fred must report income on his tax return. 
C)  Neither Tom nor Fred must report income on their tax returns. 
D) Tom must report income on his tax return. 
A)  Both of them must report income on their tax returns. 
B)  Fred must report income on his tax return. 
C)  Neither Tom nor Fred must report income on their tax returns. 
D) Tom must report income on his tax return.

Question 20

Jury duty pay is taxable income, but it can be deducted from gross income if the amount must be given to the employer.

Accepted Answer

A) True 
 B)False

There are some instances where a cash-basis taxpayer can report income as though he or she is an accrual basis taxpayer.

Determine the amount of tax liability under the following two situations. 1. The taxpayer is single with taxable income of $54,690 that includes qualified dividends of $450. 2. The taxpayer is married filing jointly with taxable income of $64,500 that includes qualified dividends of $300.

Are life insurance proceeds taxable to the recipient?

Discounts offered to employees on services cannot exceed ________ of the normal selling price.

Constructive receipt means the income is available to or in the control of the taxpayer regardless of whether the taxpayer chooses to utilize the income.

Items that must be reported on line 21 (Other Income) of the Form 1040 include:

Welfare payments received by a taxpayer must be reported in income.

Interest on state bonds is tax-exempt if the bonds were issued for private activities, such as convention centers, industrial parks, or stadiums.

Laura is a student at a state university. In 2015, she received a scholarship of $5,000 for tuition and fees and an assistantship for $3,000. What is the amount that Laura must report in income?

The following fringe benefit provided by the employer is not taxable to the employee:

Which one of the following items is not exempt under the umbrella of compensation for injuries or sickness?

If an employee receives a prize or award from his or her employer, the award is included in W-2 income.

Lisa performed bookkeeping services for Donald charging him $650. Donald agreed that he would pay Lisa's credit card bill for the same amount. Lisa has received an economic benefit and must report $650 in income on her tax return.

Receipt of property or services does not trigger income recognition for tax purposes.

For most individuals, interest income comes from interest-earning deposits at banks, savings and loans, or credit unions.

Does forgiveness of debt result in taxable income to the taxpayer (borrower)?

For tax purposes, name the three conditions that a transaction must meet for income recognition.

Payments received under workers' compensation acts are taxable to the recipient.

If Tom, an accountant, agrees to provide accounting services to Fred, a friend, in exchange for Fred fixing Tom's office floor, then:

Jury duty pay is taxable income, but it can be deducted from gross income if the amount must be given to the employer.

Introduction to Taxation, the Income Tax Formula, and Form 1040ez

Expanded Tax Formula, Forms 1040a and 1040, and Basic Concepts

Adjustments for Adjusted Gross Income

Itemized Deductions

Self-Employed Business Income

Capital Gains and Other Sales of Property

Rental Property, Royalties, Income From Flow-Through Entities

Tax Credits

Payroll Taxes

Retirement and Other Tax-Deferred Plans and Annuities:

Special Property Transactions

At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Partnership Taxation

Corporate Taxation

Filters

Exam 3: Gross Income: Inclusions and Exclusions

There are some instances where a cash-basis taxpayer can report income as though he or she is an accrual basis taxpayer.

Determine the amount of tax liability under the following two situations. 1. The taxpayer is single with taxable income of $54,690 that includes qualified dividends of $450. 2. The taxpayer is married filing jointly with taxable income of $64,500 that includes qualified dividends of $300.

Are life insurance proceeds taxable to the recipient?

Discounts offered to employees on services cannot exceed ________ of the normal selling price.

Constructive receipt means the income is available to or in the control of the taxpayer regardless of whether the taxpayer chooses to utilize the income.

Items that must be reported on line 21 (Other Income) of the Form 1040 include:

Welfare payments received by a taxpayer must be reported in income.

Interest on state bonds is tax-exempt if the bonds were issued for private activities, such as convention centers, industrial parks, or stadiums.

Laura is a student at a state university. In 2015, she received a scholarship of $5,000 for tuition and fees and an assistantship for $3,000. What is the amount that Laura must report in income?

The following fringe benefit provided by the employer is not taxable to the employee:

Which one of the following items is not exempt under the umbrella of compensation for injuries or sickness?

If an employee receives a prize or award from his or her employer, the award is included in W-2 income.

Lisa performed bookkeeping services for Donald charging him $650. Donald agreed that he would pay Lisa's credit card bill for the same amount. Lisa has received an economic benefit and must report $650 in income on her tax return.

Receipt of property or services does not trigger income recognition for tax purposes.

For most individuals, interest income comes from interest-earning deposits at banks, savings and loans, or credit unions.

Does forgiveness of debt result in taxable income to the taxpayer (borrower)?

For tax purposes, name the three conditions that a transaction must meet for income recognition.

Payments received under workers' compensation acts are taxable to the recipient.

If Tom, an accountant, agrees to provide accounting services to Fred, a friend, in exchange for Fred fixing Tom's office floor, then:

Jury duty pay is taxable income, but it can be deducted from gross income if the amount must be given to the employer.

Introduction to Taxation, the Income Tax Formula, and Form 1040ez

Expanded Tax Formula, Forms 1040a and 1040, and Basic Concepts

Adjustments for Adjusted Gross Income

Itemized Deductions

Self-Employed Business Income

Capital Gains and Other Sales of Property

Rental Property, Royalties, Income From Flow-Through Entities

Tax Credits

Payroll Taxes

Retirement and Other Tax-Deferred Plans and Annuities:

Special Property Transactions

At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Partnership Taxation

Corporate Taxation

Filters