Exam 2: Gross Income and Exclusions

Jerry and Sally were divorced under an agreement executed July 1, 2014. The terms of the agreement provide that Jerry will transfer to Sally his interest in a rental house worth $250,000 with a tax basis to Jerry of $80,000. What is the amount of the gain that must be recognized by Jerry on the transfer of the property and what is Sally's tax basis in the property after the transfer, respectively?

Cash allowances for meals or lodging generally must be included in the employee's income.

Dr. J's outstanding player award is not includible in income, since the award is in recognition of his outstanding performance.

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 -Unemployment compensation

Disability benefits are generally taxable to the individual receiving the amounts.

Richard and Alice are divorced and under the terms of their written divorce agreement signed on December 30, 2007, Richard was required to pay Alice $1,500 per month of which $700 was designated as child support. He made 12 such payments in 2014. Additionally, Richard voluntarily paid Alice $1,200 per month for 12 months of 2014, no portion of which was designated as child support. Assuming that Alice has no other income, her tax return for 2014 should show gross income of:

If a taxpayer holding EE bonds makes an election with respect to the taxation of the bonds, how is the interest which accrues on the bonds, but is not paid, taxed each year?