Exam 2: Gross Income and Exclusions

Bob is a machinist in a remote Alaskan crab-freezing plant. The plant is accessible only by boat or airplane and has no available lodging for rent. Bob's employer provides him with lodging at the plant and pays for all of his electricity, gas, and other utilities, valued at $700 per month. Is the value of the lodging taxable to Bob? Explain.

An auto that is received as a prize should be included in the taxpayer's income at its list price rather than its fair market value.

Unemployment compensation is fully taxable to the individual receiving the compensation.

Which of the following would result in life insurance proceeds that are taxable to the recipient?

If an employer claims a business deduction for group health insurance premiums paid on behalf of his employees, the amount must be included in the employees' gross income.

During the 2014 tax year, Thomas and Yolanda received $24,000 in Social Security benefits. The amount of their adjusted gross income for the year was $2,000 and they received no tax-exempt interest income. ​ Calculate the amount of the Social Security benefits that Thomas and Yolanda must include in their gross income for 2014.

In 2014, what rate would a taxpayer pay on qualified dividend income: a.If in the 33 percent bracket? b.If in the 10 percent bracket?

Bonnie receives salary income of $32,000, unemployment compensation of $4,400, and dividend income of $1,000 and a gift of $7,000 in cash from her aunt. How much total income does Bonnie have?

A taxpayer in the 28 percent tax bracket invests in a City of San Diego bond paying 8 percent interest. What taxable interest rate would provide the same after-tax return?

Seymore named his wife, Penelope, the beneficiary of a $100,000 insurance policy on his life. The policy provided that, upon his death, the proceeds would be paid at a rate of $4,000 per year plus interest over a 25-year period. Seymore died June 25, 2013, and in 2014 Penelope received a payment of $5,200 from the insurance company. What amount should she include in her gross income for 2014?

Payments made by an employer for health insurance on behalf of an employee are considered income to the employee at the time the payments are made.

Indicate whether each of the items listed below would be (a) included in gross income or (b) excluded from gross income for the 2014 tax year. ​ a.Included b.Excluded -Inheritances

Employer-provided spending accounts:

Awards, bonuses, and gifts are all included in gross income.

Indicate whether each of the items listed below would be (a) included in gross income or (b) excluded from gross income for the 2014 tax year. ​ a.Included b.Excluded -Alimony

Indicate whether each of the items listed below would be (a) included in gross income or (b) excluded from gross income for the 2014 tax year. ​ a.Included b.Excluded -Scholarships for tuition and books

Indicate whether each of the items listed below would be (a) included in gross income or (b) excluded from gross income for the 2014 tax year. ​ a.Included b.Excluded -Farm income

William, a single taxpayer, works for the men's clothing division of a large corporation. During 2014, William received the following fringe benefits: As a result of receiving the above fringe benefits, what amount must William include in his 2014 gross income?

As a Christmas thank you for being a good employee, Ed's TV Repair gave 62-year-old Edwina three shares of its stock worth $20 per share. Edwina then received dividends of $1 per share related to the stock. How much should be included in Edwina's gross income?

A scholarship for room and board granted in 2014 is fully taxable to the recipient.