Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Which of the following may be excluded from income?

Accepted Answer

A) Payment for the loss of an arm 
B) Premiums for health insurance paid by the employer 
C) Reimbursement from the insurance company for a physical examination 
D) All of the above are excluded from gross income 
E) None of the above are excluded from gross income 
A) Payment for the loss of an arm 
B) Premiums for health insurance paid by the employer 
C) Reimbursement from the insurance company for a physical examination 
D) All of the above are excluded from gross income 
E) None of the above are excluded from gross income

Question 3

Which of the following is classified as nontaxable income?

Accepted Answer

A) Unemployment compensation 
B) Dividend income 
C) Income from real estate rental property 
D) Welfare payments 
E) None of the above 
A) Unemployment compensation 
B) Dividend income 
C) Income from real estate rental property 
D) Welfare payments 
E) None of the above

Question 4

Which of the following is nontaxable income to the recipient for tax purposes?

Accepted Answer

A) Salary income 
B) Income from real estate rental property 
C) Income from tips 
D) Inheritances 
E) None of the above 
A) Salary income 
B) Income from real estate rental property 
C) Income from tips 
D) Inheritances 
E) None of the above

Question 5

Amounts received as scholarships for books and tuition may be excluded from the recipient's taxable income.

Accepted Answer

A) True 
 B)False

Question 6

If a divorce agreement executed in 2014 specifies that a portion of the amount of an alimony payment is contingent upon the status of a child, that portion is considered to be a child support payment.

Accepted Answer

A) True 
 B)False

Question 7

Elmer received the following distributions from Virginiana Mutual Fund for the calendar year 2014: Elsie, Elmer's wife, did not own any of the Virginiana Mutual Fund shares, but she did receive $175 in interest on a savings account at the Moss National Bank and $1,475 in interest on California Municipal Bonds. Elmer and Elsie filed a joint income tax return for 2014. What amount is reportable as taxable interest income?

Accepted Answer

A) $0 
B) $175 
C) $1,475 
D) $1,650 
E) None of the above 
A) $0 
B) $175 
C) $1,475 
D) $1,650 
E) None of the above

Question 8

Arthur, age 19, is a full-time student at Gordon College and is a candidate for a bachelor's degree. During 2014, he received the following amounts: What is his adjusted gross income for 2014?

Accepted Answer

A) $300 
B) $500 
C) $800 
D) $2,800 
E) None of the above 
A) $300 
B) $500 
C) $800 
D) $2,800 
E) None of the above

Question 9

All of the following amounts must be included in gross income, except:

Accepted Answer

A) Gambling winnings 
B) Partnership income 
C) Accident insurance proceeds 
D) Dividends 
E) Jury duty fees 
A) Gambling winnings 
B) Partnership income 
C) Accident insurance proceeds 
D) Dividends 
E) Jury duty fees

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

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 12

Which of the following is generally excluded from gross income?

Accepted Answer

A) Dividends 
B) Rewards 
C) Disability benefits 
D) Passive income 
E) None of the above 
A) Dividends 
B) Rewards 
C) Disability benefits 
D) Passive income 
E) None of the above

Question 13

Toby transfers to Jim a life insurance policy with a face value of $25,000 and a cash value of $5,000 in payment of a personal debt. Jim continues to make premium payments on the policy until Toby's death. At that time, Jim had paid $1,500 in premiums.
a.How much income must Jim report when he receives the $25,000 in proceeds?
b.Would your answer be different if Toby and Jim were partners in a partnership? Why?

Accepted Answer

The answer of Toby transfers to Jim a life insurance...

Question 14

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
-Life insurance proceeds received upon the death of a family member

Accepted Answer

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

Question 15

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

Accepted Answer

A) All cash payments received unless excluded by the tax code 
B) All cash payments received for services performed 
C) All income from whatever source derived 
D) All income of any kind unless the income is earned illegally 
A) All cash payments received unless excluded by the tax code 
B) All cash payments received for services performed 
C) All income from whatever source derived 
D) All income of any kind unless the income is earned illegally

Question 16

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 17

All of the following amounts are excluded from gross income, except:

Accepted Answer

A) Tips and gratuities 
B) Child support payments 
C) Scholarship grants for tuition 
D) Gifts 
E) Veterans' benefits 
A) Tips and gratuities 
B) Child support payments 
C) Scholarship grants for tuition 
D) Gifts 
E) Veterans' benefits

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

Amounts received by an employee as reimbursement for medical expenses under a policy provided by the taxpayer's employer are excluded from gross income.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is excluded from gross income?

Accepted Answer

A) Prizes 
B) Scholarships for tuition 
C) Hobby income 
D) Rental income 
E) All of the above are included in gross income 
A) Prizes 
B) Scholarships for tuition 
C) Hobby income 
D) Rental income 
E) All of the above are included in gross income

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

Which of the following may be excluded from income?

Which of the following is classified as nontaxable income?

Which of the following is nontaxable income to the recipient for tax purposes?

Amounts received as scholarships for books and tuition may be excluded from the recipient's taxable income.

If a divorce agreement executed in 2014 specifies that a portion of the amount of an alimony payment is contingent upon the status of a child, that portion is considered to be a child support payment.

Arthur, age 19, is a full-time student at Gordon College and is a candidate for a bachelor's degree. During 2014, he received the following amounts: What is his adjusted gross income for 2014?

All of the following amounts must be included in gross income, except:

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

Which of the following is generally excluded from 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 -Life insurance proceeds received upon the death of a family member

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

All of the following amounts are excluded from gross income, except:

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

Amounts received by an employee as reimbursement for medical expenses under a policy provided by the taxpayer's employer are excluded from gross income.

Which of the following is excluded from gross 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

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

Which of the following may be excluded from income?

Which of the following is classified as nontaxable income?

Which of the following is nontaxable income to the recipient for tax purposes?

Amounts received as scholarships for books and tuition may be excluded from the recipient's taxable income.

If a divorce agreement executed in 2014 specifies that a portion of the amount of an alimony payment is contingent upon the status of a child, that portion is considered to be a child support payment.

Arthur, age 19, is a full-time student at Gordon College and is a candidate for a bachelor's degree. During 2014, he received the following amounts: What is his adjusted gross income for 2014?

All of the following amounts must be included in gross income, except:

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

Which of the following is generally excluded from 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 -Life insurance proceeds received upon the death of a family member

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

All of the following amounts are excluded from gross income, except:

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

Amounts received by an employee as reimbursement for medical expenses under a policy provided by the taxpayer's employer are excluded from gross income.

Which of the following is excluded from gross 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

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 -Life insurance proceeds received upon the death of a family member