Exam 2: Gross Income and Exclusions

Elmore receives a rental property as an inheritance from his grandmother.The rental is worth $500,000 and Elmore collected rental income of $24,000 during the year. For the year,how much is Elmore's gross income as a result of the inheritance?

Elmer received the following distributions from Virginiana Mutual Fund for the calendar year 2017: Elsie,Elmer's wife,did not own any of the Virginiana Mutual Fund shares,but she did receive $1,475 in interest on a savings account at the Moss National Bank and $175 in interest on California Municipal Bonds.Elmer and Elsie filed a joint income tax return for 2017.What amount is reportable as taxable interest income?

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.

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

Richard,who retired on April 30,2017,receives a monthly employee annuity benefit of $1,400 payable for life,beginning May 1,2017.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 $11,200 annuity payment received during 2017 may Richard exclude from gross income?

Geoff is a company president who has had a very good year at work.The owner of the company is pleased and gives him a gift of $50,000 at the end of the year.The owner writes "gift" in the memo section of the check.How much of the gift is taxable to Geoff?

An investor is comparing the following two bonds: a bond from ABC Corp which pays an interest rate of 9 percent per year and a municipal bond which pays an interest rate of 7.9 percent per year.The investor is in the 15 percent tax bracket.Which bond will give the investor a higher after-tax interest rate and for which reason?

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

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

Laura and Leon were granted a divorce in 2012.In accordance with the decree,Leon made the following payments to Laura in 2017: How much should Laura include in her 2017 taxable income as alimony?

Which of the following is generally excluded from gross income?

Noncash items received as income must be included in income at their fair market value.

Indicate which of the following statements is true.

State whether each of the following is taxable or nontaxable. a.Susan won a jackpot of $50,000 gambling at a casino. b.Sarah received a Christmas ham from her employer. c.Jonathan won a car in a supermarket raffle valued at $25,000. d.Gary received a scholarship for tuition of $5,000 a year. e.Eric is given lodging valued at $1,000 a month on the oil rig where he is employed since it is impossible for Eric to go home during the period of time he is assigned to work on the rig.

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

Laura and Leon were granted a divorce in 2008.In accordance with the decree,Leon made the following payments to Laura in 2017: How much of the payments can he deduct as alimony in 2017?

In June of the current year,a wealthy aunt gave Janie a stock portfolio worth $150,000.During the year,she collects $4,000 in dividends.How much of these amounts,if any,should Janie include in gross income for the current year? Why?

If an annuitant,whose annuity starting date was January 1,2007,dies before recovering his or her investment in the annuity,any unrecovered investment is recognized as a loss on the annuitant's tax return for the year of death.

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

In 2017,Uriah received the following interest payments: ​ Interest of $300 on an overpayment of 2016 Federal income taxes Interest of $400 from his bank certificate of deposit. Interest of $1,000 on municipal bonds Interest of $1,500 on United States savings bonds (Series HH) ​ What amount,if any,should Uriah report as taxable interest income on his 2017 individual income tax return?