Exam 2: Gross Income and Exclusions

A taxpayer in the 33 percent tax bracket invests in a New York City Bond paying 5 percent interest.What taxable interest rate would provide the same after-tax return?

All of the following amounts are taxable income to the recipient except:

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?

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

Curt's tax client,Terry,is employed at a large company that offers health care flexible spending accounts to its employees.Terry must decide at the beginning of the year whether he wants to put as much as $2,600 of his salary into the medical flexible spending account.Terry has excellent insurance through the company and is very healthy.He does not expect to have any medical expenses during the year.Terry does not itemize deductions.Should Curt recommend that Terry put the maximum in his health care flexible spending account? Why or why not?

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. -Municipal bond interest

Dividend income arising from stock received as a gift is excluded from gross income since the dividends are considered part of the gift.

Roger is required under a 2011 divorce decree to pay $500 of alimony and $200 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?