Question 1

Upon the sale of property,a portion of the selling price equal to the basis in the property is considered a return of capital to the seller and is,therefore,not taxable.

Accepted Answer

A) True 
 B)False

Question 2

Discuss briefly the options available for avoiding double taxation for the U.S.citizen earning income from sources outside the United States.

Accepted Answer

The answer of Discuss briefly the options available for avoiding...

Question 3

Bret carries a $200,000 insurance policy on his life and has paid premiums of $10,000 over the years.Dividends on the policy have totaled $8,500.Each year Bret has left the dividends with the insurance company.In the current year,the insurance company credited $800 of interest on the accumulated dividends to Bret's account.In addition,$600 of dividends was added by the insurance company.In the current year,Bret must report income of

Accepted Answer

A)  $0. 
B)  $600. 
C)  $800. 
D)  $1,400.

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Hope receives an $18,500 scholarship from State University.The university specifies that $8,500 is for tuition,books,supplies,and equipment,while $10,000 is for room and board.In addition,Hope works part-time at the campus library and earns $5,000.Hope's gross income is

Accepted Answer

A)  $5,000. 
B)  $15,000. 
C)  $18,500. 
D)  $23,500.

Question 6

Jamal,age 52,is a human resources manager for Triple W Company.His annual salary is $110,000 and he receives the following fringe benefits during the current year:
• Triple W pays for all employees' health and accident insurance.Triple W pays $7,000 for Jamal's health insurance during the year.
• Triple W provides Jamal with group-term life insurance coverage of $200,000 during the year.The monthly inclusion amount per $1,000 of coverage is $.23.
• Triple W has a flexible benefits plan in which employees may participate to pay any qualifying medical costs not reimbursed by their health insurance.Jamal has $1,600 withheld from his salary under the plan.During the year he receives reimbursements of $1,300.
• Triple W pays parking costs for all management employees.Jamal's parking costs $220 a month.
• Triple W pays Jamal's annual membership dues of $450 to the Society of Human Resource Management Association.The company also subscribes to several management journals for Jamal costing $650 a year.
• Jamal took a college class on financial accounting and Triple W reimbursed his tuition of $6,000 through its tuition assistance program for all employees.
• Jamal's consumption of coffee provided by Triple W is estimated at $250 a year.
How much income must Jamal report from his job?

Accepted Answer

The answer of Jamal,age 52,is a human resources manager for...

Question 7

John,an employee of a manufacturing company,suffered a heart attack and was unable to work for six months.He received $1,500 per month of disability benefits as a result of an employer-provided group policy.The benefits are includible in John's gross income.

Accepted Answer

A) True 
 B)False

Question 8

"No additional cost" benefits are excluded from an employee's gross income if the services are the same type that are sold to customers and in the line of business in which the employee works.

Accepted Answer

A) True 
 B)False

Question 9

Ahmad's employer pays $10,000 in tuition this year for Ahmad to attend a graduate business program.How much of the employer-provided tuition is taxable to Ahmad?

Accepted Answer

A)  $0 
B)  $4,750 
C)  $5,250 
D)  $10,000

Question 10

Chloe receives a student loan from a foundation which encourages students to pursue teaching careers.Under the terms of the loan,Chloe will not have to repay the loan if she teaches in a public school for ten years.What tax issues should Chloe consider?

Accepted Answer

The answer of Chloe receives a student loan from a...

Question 11

All of the following are requirements for excluding employee achievement awards except for

Accepted Answer

A)  tangible personal property other than cash. 
B)  based on safety records or length of service. 
C)  part of a meaningful presentation. 
D)  if paid in cash, must be less than $400.

Question 12

In 2015 Bonnie,a sole proprietor,loaned her employee,John,$10,000 to help him buy a car.In 2017,before he repaid the $10,000,Bonnie told John that she was "tearing up" the $10,000 note in recognition of his strong job performance.How should John 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 13

Meals may be excluded from an employee's gross income provided they are furnished on the employer's business premises and are for the convenience of the employee.

Accepted Answer

A) True 
 B)False

Question 14

All of the following items are excluded from gross income except

Accepted Answer

A)  working condition benefits. 
B)  de minimis benefits. 
C)  no additional cost benefits for employees. 
D)  disability income from an employer-financed policy.

Question 15

Which of the following items will result in an increase in gross income?

Accepted Answer

A)  Receipt of a $10,000 check from the bank. The check is for a student loan. 
B)  Receiving a $10,000 award from a university for high grades and high SAT scores. The award is used to pay tuition. 
C)  Preparing a mechanic's tax return in exchange for the mechanic replacing the muffler on your car. 
D)  None of the above will be included in gross income.

Question 16

Martina,who has been employed by the Smythe Corporation for ten years,receives a $400 watch as a length of service award in a meaningful presentation.The fair value of the watch is taxable.

Accepted Answer

A) True 
 B)False

Exam 4: Gross Income: Exclusions

Upon the sale of property,a portion of the selling price equal to the basis in the property is considered a return of capital to the seller and is,therefore,not taxable.

Discuss briefly the options available for avoiding double taxation for the U.S.citizen earning income from sources outside the United States.

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

Hope receives an $18,500 scholarship from State University.The university specifies that $8,500 is for tuition,books,supplies,and equipment,while $10,000 is for room and board.In addition,Hope works part-time at the campus library and earns $5,000.Hope's gross income is

John,an employee of a manufacturing company,suffered a heart attack and was unable to work for six months.He received $1,500 per month of disability benefits as a result of an employer-provided group policy.The benefits are includible in John's gross income.

"No additional cost" benefits are excluded from an employee's gross income if the services are the same type that are sold to customers and in the line of business in which the employee works.

Ahmad's employer pays $10,000 in tuition this year for Ahmad to attend a graduate business program.How much of the employer-provided tuition is taxable to Ahmad?

Chloe receives a student loan from a foundation which encourages students to pursue teaching careers.Under the terms of the loan,Chloe will not have to repay the loan if she teaches in a public school for ten years.What tax issues should Chloe consider?

All of the following are requirements for excluding employee achievement awards except for

In 2015 Bonnie,a sole proprietor,loaned her employee,John,$10,000 to help him buy a car.In 2017,before he repaid the $10,000,Bonnie told John that she was "tearing up" the $10,000 note in recognition of his strong job performance.How should John treat the amount forgiven?

Meals may be excluded from an employee's gross income provided they are furnished on the employer's business premises and are for the convenience of the employee.

All of the following items are excluded from gross income except

Which of the following items will result in an increase in gross income?

Martina,who has been employed by the Smythe Corporation for ten years,receives a $400 watch as a length of service award in a meaningful presentation.The fair value of the watch is taxable.