Question 1

Which of the following amounts must be included in the gross income of the recipient?

Accepted Answer

A) Child support payments 
B) Welfare payments 
C) Gifts 
D) Royalties 
E) All of the above are included in gross income 
A) Child support payments 
B) Welfare payments 
C) Gifts 
D) Royalties 
E) All of the above are included in gross income

Question 2

In June of 2014, Rob's wealthy stepmother died and left him a stock portfolio worth $600,000. Before she died, she gave him a gift of $20,000 in cash. How much of these amounts, if any, are taxable to Rob? Why?

Accepted Answer

$0
Inheritances and

Question 3

As part of the property settlement related to their divorce, Stella must give Peter the house that they have been living in, while she gets 100 percent of their savings accounts. The house was purchased in Texas 15 years ago for $100,000 and is now worth $110,000. How much gain must Stella recognize on the transfer of the house to Peter? What is Peter's tax basis in the house for calculating any future sale of the house?

Accepted Answer

No gain is taxable to Stella on the tran

Question 4

Marie had a good year. She received the following prizes and awards: - an iPad from The Oprah Show with a fair market value of $500
- lottery winnings of $1,000 received in cash
- a plaque worth $25 plus $100 of Godiva chocolate in recognition for 100 days on the job without an accident
- a $10,000 cash prize from American Idol
How much of her prizes and awards should Marie report on her tax return?

Accepted Answer

A) None, they are all excluded from income 
B) $11,000; only cash prizes and awards are included 
C) $11,500; the award from her job is excluded 
D) $11,700; the plaque may be excluded 
E) $11,725; everything is included at the highest amount 
A) None, they are all excluded from income 
B) $11,000; only cash prizes and awards are included 
C) $11,500; the award from her job is excluded 
D) $11,700; the plaque may be excluded 
E) $11,725; everything is included at the highest amount

Question 5

Andy landscaped his friend's house in return for a couch set and an HD television worth $8,000. How much income must Andy report on his tax return for his services?

Accepted Answer

The noncash payment of $8,000 for servic

Question 6

Helga receives a $300,000 life insurance payment when her boyfriend Andy dies. How much of the payment is taxable to Helga?

Accepted Answer

None of the payment is taxable

Question 7

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

Accepted Answer

A) A subscription to a tax journal provided by the employer to a corporation's tax accountant 
B) A small discount on toys granted to the salesperson for a toy store 
C) Incidental use of the company's copier by an office worker 
D) A 15 percent discount on investment real estate granted to the employee of a real estate developer 
E) All of the above are tax-free 
A) A subscription to a tax journal provided by the employer to a corporation's tax accountant 
B) A small discount on toys granted to the salesperson for a toy store 
C) Incidental use of the company's copier by an office worker 
D) A 15 percent discount on investment real estate granted to the employee of a real estate developer 
E) All of the above are tax-free

Question 8

Which of the following is correct?

Accepted Answer

A) Employee discounts are always included in gross income. 
B) Employee discounts of up to 20 percent may be taken on personal property held for investment. 
C) Employee discounts are not tax-free if they exceed the employer's gross markup for merchandise. 
D) Tax-free employee discounts include discounts in lines of business in which the employee does not work. 
A) Employee discounts are always included in gross income. 
B) Employee discounts of up to 20 percent may be taken on personal property held for investment. 
C) Employee discounts are not tax-free if they exceed the employer's gross markup for merchandise. 
D) Tax-free employee discounts include discounts in lines of business in which the employee does not work.

Question 9

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
-Municipal bond interest

Accepted Answer

The answer of Indicate whether each of the items listed...

Question 10

In some cases, Social Security benefits may be partially taxable.

Accepted Answer

A) True 
 B)False

Question 11

Sam died on January 15, 2004 and left his wife, Terry, an insurance policy with a face value of $100,000. Terry elected to receive the proceeds over a 10-year period ($10,000 plus interest each year). This year Terry receives $11,500 ($10,000 proceeds plus $1,500 interest) from the insurance company. How much income must Terry report from this payment?

Accepted Answer

A) $0 
B) $500 
C) $1,500 
D) $11,500 
E) None of the above 
A) $0 
B) $500 
C) $1,500 
D) $11,500 
E) None of the above

Question 12

Barry has a successful methamphetamine laboratory. Producing methamphetamine is illegal under federal law. Is Barry required by law to report the income from his lab on his tax return? Why?

Accepted Answer

Yes. Illegal income is still t

Question 13

Richard, who retired on April 30, 2014, receives a monthly employee annuity benefit of $1,400 payable for life, beginning May 1, 2014. 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 annuity payment amounts received during 2014 ($11,200) 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 14

Roger is required under a 2004 divorce decree to pay $200 of alimony and $500 of child support per month for 12 years. In addition, Roger makes a voluntary payment of $100 per month. How much of the total monthly payment is deductible by Roger?

Accepted Answer

A) $0 
B) $200 
C) $500 
D) $600 
E) None of the above 
A) $0 
B) $200 
C) $500 
D) $600 
E) None of the above

Question 15

Robert works for American Motors. American Motors pays a $1,200 premium on Robert's health insurance in 2014. Robert has an operation on his big toe in 2014 that cost $7,200. The insurance company paid for $6,800 of it. Which one of the following is true for 2014?

Accepted Answer

A) Robert must claim the $1,200 premium paid by his employer as income. 
B) Robert must claim the $6,800 paid by the insurance company for the operation as income. 
C) Robert must claim the $1,200 premium and the $6,800 insurance payment as income. 
D) None of these events are taxable on his 2014 return. 
A) Robert must claim the $1,200 premium paid by his employer as income. 
B) Robert must claim the $6,800 paid by the insurance company for the operation as income. 
C) Robert must claim the $1,200 premium and the $6,800 insurance payment as income. 
D) None of these events are taxable on his 2014 return.

Question 16

To pay for college, Henry received the following: $1,000 scholarship from the Thespian Club to pay for books
$5,000 scholarship from the Elks Lodge for tuition
$4,000 worth of room and board as a dorm supervisor through a work-study program
​
How much income must Henry report on his tax return?

Accepted Answer

A) $0 
B) $4,000 
C) $5,000 
D) $6,000 
E) $10,000 
A) $0 
B) $4,000 
C) $5,000 
D) $6,000 
E) $10,000

Question 17

For divorces after 1984, which of the following statements about alimony payments is not correct?

Accepted Answer

A) The payments must be in cash and must be received by the spouse (or former spouse) 
B) Divorced or legally separated parties can be members of the same household at the time the payments are made 
C) The payor must have no liability to make payments for any period following the death of the spouse receiving the payments 
D) The payments must not be designated in the written agreement as anything other than alimony 
A) The payments must be in cash and must be received by the spouse (or former spouse) 
B) Divorced or legally separated parties can be members of the same household at the time the payments are made 
C) The payor must have no liability to make payments for any period following the death of the spouse receiving the payments 
D) The payments must not be designated in the written agreement as anything other than alimony

Question 18

When calculating the exclusion ratio for an annuity, the ratio should be revised when there is a significant change in the taxpayer's status or health.

Accepted Answer

A) True 
 B)False

Question 19

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 20

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
-Wages

Accepted Answer

The answer of Indicate whether each of the items listed...

Which of the following amounts must be included in the gross income of the recipient?

In June of 2014, Rob's wealthy stepmother died and left him a stock portfolio worth $600,000. Before she died, she gave him a gift of $20,000 in cash. How much of these amounts, if any, are taxable to Rob? Why?

Andy landscaped his friend's house in return for a couch set and an HD television worth $8,000. How much income must Andy report on his tax return for his services?

Helga receives a $300,000 life insurance payment when her boyfriend Andy dies. How much of the payment is taxable to Helga?

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

Which of the following is correct?

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 -Municipal bond interest

In some cases, Social Security benefits may be partially taxable.

Barry has a successful methamphetamine laboratory. Producing methamphetamine is illegal under federal law. Is Barry required by law to report the income from his lab on his tax return? Why?

Roger is required under a 2004 divorce decree to pay $200 of alimony and $500 of child support per month for 12 years. In addition, Roger makes a voluntary payment of $100 per month. How much of the total monthly payment is deductible by Roger?

Robert works for American Motors. American Motors pays a $1,200 premium on Robert's health insurance in 2014. Robert has an operation on his big toe in 2014 that cost $7,200. The insurance company paid for $6,800 of it. Which one of the following is true for 2014?

To pay for college, Henry received the following: $1,000 scholarship from the Thespian Club to pay for books $5,000 scholarship from the Elks Lodge for tuition $4,000 worth of room and board as a dorm supervisor through a work-study program How much income must Henry report on his tax return?

For divorces after 1984, which of the following statements about alimony payments is not correct?

When calculating the exclusion ratio for an annuity, the ratio should be revised when there is a significant change in the taxpayer's status or health.

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 2014 tax year. a.Included b.Excluded -Wages

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

Which of the following amounts must be included in the gross income of the recipient?

In June of 2014, Rob's wealthy stepmother died and left him a stock portfolio worth $600,000. Before she died, she gave him a gift of $20,000 in cash. How much of these amounts, if any, are taxable to Rob? Why?

Andy landscaped his friend's house in return for a couch set and an HD television worth $8,000. How much income must Andy report on his tax return for his services?

Helga receives a $300,000 life insurance payment when her boyfriend Andy dies. How much of the payment is taxable to Helga?

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

Which of the following is correct?

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 -Municipal bond interest

In some cases, Social Security benefits may be partially taxable.

Barry has a successful methamphetamine laboratory. Producing methamphetamine is illegal under federal law. Is Barry required by law to report the income from his lab on his tax return? Why?

Roger is required under a 2004 divorce decree to pay $200 of alimony and $500 of child support per month for 12 years. In addition, Roger makes a voluntary payment of $100 per month. How much of the total monthly payment is deductible by Roger?

Robert works for American Motors. American Motors pays a $1,200 premium on Robert's health insurance in 2014. Robert has an operation on his big toe in 2014 that cost $7,200. The insurance company paid for $6,800 of it. Which one of the following is true for 2014?

To pay for college, Henry received the following: $1,000 scholarship from the Thespian Club to pay for books $5,000 scholarship from the Elks Lodge for tuition $4,000 worth of room and board as a dorm supervisor through a work-study program ​ How much income must Henry report on his tax return?

For divorces after 1984, which of the following statements about alimony payments is not correct?

When calculating the exclusion ratio for an annuity, the ratio should be revised when there is a significant change in the taxpayer's status or health.

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 2014 tax year. ​ a.Included b.Excluded -Wages

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

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 -Municipal bond interest

To pay for college, Henry received the following: $1,000 scholarship from the Thespian Club to pay for books $5,000 scholarship from the Elks Lodge for tuition $4,000 worth of room and board as a dorm supervisor through a work-study program How much income must Henry report on his tax return?

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 -Wages