Exam 2: Gross Income and Exclusions

Bonnie receives salary income of $32,000,unemployment compensation of $4,400,and interest income of $1,200 and a gift of $7,000 in cash from her aunt.How much total income does Bonnie have?

Peter is required by his divorce agreement to pay alimony of $4,000 a month and child support of $6,000 a month to his ex-wife Stella.What is the tax treatment of these two payments? To Peter? To Stella?

Marco and his family are covered by his company's health insurance plan.The health insurance costs his company $8,500 a year.During the year,Marco's daughter is diagnosed with a serious illness and the health insurance pays $25,000 for treatment.How much of the insurance and treatment costs are taxable to Marco?

If a life insurance policy is transferred to the insured's partnership for valuable consideration,the insurance proceeds are taxable when received by the partnership.

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

Indicate whether each of the items listed below would be (a) included in gross income or (b) excluded from gross income for the 2017 tax year. -Farm income

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.

Employer-provided spending accounts:

Jack is a lawyer and Jeri is a child psychologist.Jack prepares Jeri's estate planning at no charge and Jeri agrees to counsel Jack's daughter six times at no charge in return for the estate planning.The value of the estate planning is $1,000 and the value of the therapy sessions is $1,000. a.How much income does Jack have? Why? b.How much income does Jeri have? Why?

Kim earned $30,000 from Pfizer before she was laid off.She then collected $7,000 of unemployment benefits.Finally,Kim received a $12,500 scholarship for tuition so she could return to college to earn a microbiology degree.How much does Kim need to report as income on her tax return?

Which taxpayer would benefit the most from a tax-free municipal bond compared to a taxable bond?

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

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

Group term life insurance premiums paid by an employer for insurance amounts less than $50,000 must be included in the employee's income.

In regards to Social Security benefits:

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 of last year,and in the current year Penelope received a payment of $5,200 from the insurance company.What amount should she include in her gross income for the current year?

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?

Under the terms of a property settlement executed during the current year,Cindy transferred a house worth $350,000 to her ex-husband,Carl.The property has a tax basis to Cindy of $300,000. a.How much taxable gain or loss must be recognized by Cindy at the time of the transfer? b.What is Carl's tax basis in the property he received from Cindy?

During the current year,Margaret and John received $24,000 in Social Security benefits.The amount of their adjusted gross income for the year before any Social Security income was $140,000 and they received $19,000 in tax-exempt income. ​ Explain the treatment of their Social Security income for tax purposes and the likely percentage of the Social Security income that will be taxable to Margaret and John.

In June of the current year,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?