Question 1

Joe Black,a police officer,was injured in the line of duty.He received the following during the current year:  What is the amount that is taxable?

Accepted Answer

A) $57,000 
B) $66,000 
C) $71,000 
D) $84,000

Question 2

Jillian has just accepted an offer from accounting firm for a full-time position after completion of her master's degree.In addition to paying a high salary and premiums on the basic health insurance policy,the firm will pay the benefits listed below.Which of the following benefits can be excluded (assume the benefits are provided on a non-discriminatory basis to all employees)?

Accepted Answer

A) season's tickets for the local professional baseball team 
B) repayment of $1,500 of employee student loans; payment is made directly to the lender 
C) payment of eyecare coverage 
D) All of the above are excluded.

Question 3

Accelerated death benefits from a life insurance policy received by a terminally ill person may be excluded from taxable income.

Accepted Answer

A) True 
 B)False

Question 4

Healthwise Ambulance requires its employees to be on 24-hour call and consequently gives them $800 per month housing allowance and a $200 per month food allowance.Ron,an employee of Healthwise,receives a salary of $40,000 per year (this does not include the allowances).Ron will be taxed each year on

Accepted Answer

A) $40,000. 
B) $42,400. 
C) $49,600. 
D) $52,000.

Question 5

All of the following fringe benefits paid for by the employer may be excluded from an employee's gross income except

Accepted Answer

A) discounts on services of 25 percent. 
B) subscriptions to professional publications. 
C) recreational facilities on employer's premises. 
D) company-paid parking costing $225 per month to non-employees.

Question 6

Awards for emotional distress attributable to a physical injury are excluded from gross income.

Accepted Answer

A) True 
 B)False

Question 7

Jan has been assigned to the Rome office of ABC Corporation.She arrives in Rome on November 1,2016 and does not return to the United States until March 5,2018.During her stay in Rome,Jan earned $112,000 in 2017.Jan may exclude

Accepted Answer

A) $0. 
B) $16,336. 
C) $102,100. 
D) $112,000.

Question 8

Elisa sued her former employer for discrimination.She was awarded $200,000 for lost wages,$30,000 for medical expenses related to emotional distress resulting from the discrimination,and $300,000 in punitive damages.The amount taxable is

Accepted Answer

A) $0. 
B) $200,000. 
C) $500,000. 
D) $530,000.

Question 9

John is injured and receives $16,000 of income from a disability policy.John's employer paid 75% of the disability policy premiums and John paid the remainder.In addition,John's employer has paid all the $3,000 of premiums on a health policy that paid John's doctor bills of $10,000.How much of the benefits must John include in income?

Accepted Answer

A) $3,000 
B) $10,000 
C) $12,000 
D) $16,000

Question 10

A taxpayer may avoid tax on income by having the payment made to another taxpayer.

Accepted Answer

A) True 
 B)False

Question 11

In 2015 Betty loaned her son,Juan,$10,000 to help him buy a car.In 2017,before he repaid the $10,000,Betty told Juan that she was "tearing up" the $10,000 note as a graduation present.How should Juan treat the amount forgiven?

Accepted Answer

A) taxable income in year of loan 
B) taxable income in year of forgiveness 
C) excludible gift in year of loan 
D) excludible gift in year of forgiveness

Question 12

David has been diagnosed with cancer and is expected to live less than 18 months.David is covered by a life insurance policy with a $400,000 face amount.David cashes in the policy early under a special option and receives 80% of the face amount or $320,000.In the year of collection,David will report

Accepted Answer

A) no income. 
B) $80,000. 
C) $320,000. 
D) $400,000.

Question 13

Sharisma suffered a serious stroke and was admitted to a nursing home for 140 days.Nursing home charges,including physician fees and other related expenses were $63,000.Under Sharisma's long-term care insurance contract,she received reimbursements of $56,000.How much of the $56,000 reimbursement must be included in Sharisma's gross income in 2017?

Accepted Answer

A) $0 
B) $5,600 
C) $56,000 
D) $7,000

Question 14

Randy and Sharon are married and have two dependent children.Their 2017 tax and other related information is as follows:
  Compute Randy and Sharon's taxable income.(Show all calculations in good form. )

Accepted Answer

The answer of Randy and Sharon are married and have...

Question 15

Mark,a cash-basis taxpayer,died on September 30,2017.His wife,Charlotte,provides you with the following information.
From January 1,2017 until his death,Mark received a salary of $35,000.Charlotte received a salary of $68,000 during 2017.Mark had earned commissions of $20,000 which Charlotte received after his death.Charlotte was the beneficiary of a $100,000 whole life policy purchased by Mark and a $50,000 group term life insurance policy purchased by Mark's employer.The employer had paid premiums of $250 on Mark's behalf.In addition,the corporation paid Charlotte a $10,000 employee death benefit in Mark's name.All employees' families received similar benefits regardless of financial need.Mark and Charlotte had itemized deductions of $15,600.What is the amount of their taxable income on their 2017 tax return?

Accepted Answer

The answer of Mark,a cash-basis taxpayer,died on September 30,2017.His wife,Charlotte,provides...

Question 16

"Working condition fringe benefits," such as memberships in professional organizations paid for by the employer,are generally excluded from the employee's gross income.

Accepted Answer

A) True 
 B)False

Question 17

Chad and Jaqueline are married and have AGI of $150,000.In 2017 they adopted a child,while taking advantage of their employer's written adoption assistance program.The adoption cost $9,500,all of which was paid by the employer in accordance with the adoption plan.How much of the employer-paid adoption costs may be excluded from their income?

Accepted Answer

A) $0 
B) $5,000 
C) $5,250 
D) $9,500

Question 18

Melanie,a U.S.citizen living in Paris,France,for the last three years,earns a salary of $125,000 in 2017.Melanie's housing costs are $24,000 per year,which is reasonable.How much can Melanie exclude from income?

Accepted Answer

A) $118,436 
B) $102,100 
C) $109,764 
D) $149,000

Question 19

The amount of cash fringe benefits received under a cafeteria plan is taxable to an employee.

Accepted Answer

A) True 
 B)False

Question 20

Over the years Rianna paid $65,000 in premiums on a life insurance policy with a face value of $100,000.Upon reaching 65,while still in good health,Rianna surrendered the policy and collected $95,000.In the year of collection,Rianna will report

Accepted Answer

A) no income. 
B) $30,000 of taxable income. 
C) $5,000 of tax loss. 
D) $95,000 of taxable income.

Exam 20: Gross Income: Exclusions

Joe Black,a police officer,was injured in the line of duty.He received the following during the current year: What is the amount that is taxable?

Accelerated death benefits from a life insurance policy received by a terminally ill person may be excluded from taxable income.

All of the following fringe benefits paid for by the employer may be excluded from an employee's gross income except

Awards for emotional distress attributable to a physical injury are excluded from gross income.

Jan has been assigned to the Rome office of ABC Corporation.She arrives in Rome on November 1,2016 and does not return to the United States until March 5,2018.During her stay in Rome,Jan earned $112,000 in 2017.Jan may exclude

Elisa sued her former employer for discrimination.She was awarded $200,000 for lost wages,$30,000 for medical expenses related to emotional distress resulting from the discrimination,and $300,000 in punitive damages.The amount taxable is

A taxpayer may avoid tax on income by having the payment made to another taxpayer.

In 2015 Betty loaned her son,Juan,$10,000 to help him buy a car.In 2017,before he repaid the $10,000,Betty told Juan that she was "tearing up" the $10,000 note as a graduation present.How should Juan treat the amount forgiven?

Randy and Sharon are married and have two dependent children.Their 2017 tax and other related information is as follows: Compute Randy and Sharon's taxable income.(Show all calculations in good form. )

"Working condition fringe benefits," such as memberships in professional organizations paid for by the employer,are generally excluded from the employee's gross income.

Melanie,a U.S.citizen living in Paris,France,for the last three years,earns a salary of $125,000 in 2017.Melanie's housing costs are $24,000 per year,which is reasonable.How much can Melanie exclude from income?

The amount of cash fringe benefits received under a cafeteria plan is taxable to an employee.

Over the years Rianna paid $65,000 in premiums on a life insurance policy with a face value of $100,000.Upon reaching 65,while still in good health,Rianna surrendered the policy and collected $95,000.In the year of collection,Rianna will report