question

Sam died on January 15, (5 years ago) and left his wife, Terry, an insurance policy with a face value of $100,000. Terry elected to receive the proceeds over a ten-year period ($10,000 plus interest each year). This year Terry receives $11,500 ($10,000 proceeds plus $1,500 interest) from the insurance company. How much income must Terry report from this payment?

answer

1500

question

Sam, a calendar year taxpayer, purchased an annuity contract for $3,600 that would pay him $120 a month beginning on January 1, current tax year. His expected return under the contract based on his life expectancy is $10,800. Assuming Sam received a total of $1,440 in payments during the current tax year, how much of this annuity income is included in Sam's gross income for the current tax year, using the general rule?

answer

960

question

In the current tax year, Uriah received the following interest payments: Interest of $400 on an overpayment of prior year's Federal Income taxes; Interest of $ 300 on an award received for money lost due to fraud by his investment advisor in 2000; Interest of $1,500 on municipal bonds; Interest of $1,000 on United States savings bonds (Series HH) What amount, if any, should Uriah report as taxable interest income on his current year's individual income tax return?

answer

1700

question

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

answer

1200

question

Mary received the following items during the current tax year: Christmas bonus from her employer $500 Christmas gift from her father $35 Prize won in a radio show contest $100 What is the total amount of the above items that must be included in Mary's gross income?

answer

600

question

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

answer

Gifts

question

Arthur, age 19, is a full-time student at Gordon College and is a candidate for a bachelor's degree. During the current tax year he received the following amounts: Tuition scholarship $2,400; Loan from college financial aid office $1,000; Cash support from parents $2,000; Ordinary cash dividend $500; and Cash prize awarded in contest $300. What is his adjusted gross income for the current tax year?

answer

800

question

Jerry and Sally were divorced under an agreement executed July 1, (current year). The terms of the agreement provide that Jerry will transfer to Sally his interest in a rental house worth $250,000 with a tax basis to Jerry of $80,000. What is the amount of the gain that must be recognized by Jerry on the transfer of the property and what is Sally's tax basis in the property after the transfer, respectively.

answer

$0 and $80,000

question

Which of the following amounts must be included in the gross income of the recipient?

answer

Royalties

question

Richard and Alice lived apart during all of the current tax year. Under the terms of their written divorce agreement signed on December 30, (prior year), Richard was required to pay Alice $1,500 per month of which $600 was designated as child support. He made twelve such payments in the current tax year. Additionally, Richard voluntarily paid Alice $1,200 per month for twelve months of the current tax year, no portion of which was designated as child support. Assuming that Alice has no other income, her tax return for the current tax year should show gross income of:

answer

10800

question

All of the following amounts must be included in gross income, except:

answer

Accident insurance proceeds

question

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

answer

A 15 percent discount on investment real estate granted to the employee of a real estate developer

question

As a Christmas thank-you for being a good employee, Ed's TV Repair gave 62 year-old Edwina 3 shares of its stock worth $20 per share. Edwina then received dividends of $1 per share related to the stock. How much should be included in Edwina's gross income?

answer

63

question

Which of the following is classified as portfolio income for tax purposes?

answer

Interest income

question

Elmer received the following distributions from Virginiana Mutual Fund for the current calendar year: Ordinary dividends (nonqualifying) $250; Capital gain distributions $170; Nontaxable distributions $80. Elsie, Elmer's wife, did not own any of the Virginiana Mutual Fund shares, but she received $175 in interest on a savings account at the Moss National Bank and $1,475 in interest on U.S. Treasury Bills. Elmer and Elsie filed a joint income tax return for the current year. What portion of the distributions from Virginiana Mutual Fund is taxable as ordinary income on their current year's individual income tax return?

answer

250

question

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

answer

An insurance policy transferred to a creditor in payment of a debt

question

Which of the following is excluded from gross income?

answer

Scholarships for tuition

question

Which of the following is correct?

answer

Employee discounts are not tax-free if they exceed the employer's gross markup for merchandise

question

Laura and Leon were granted a divorce in five years ago. In accordance with the decree, Leon made the following payments to Laura in the current tax year: Child support payments contingent on the age of the child $4,000. Annual cash payments other than child support $6,000. How much should Laura include in her current year's taxable income as alimony?

answer

6000

question

Laura and Leon were granted a divorce 5 years ago. In accordance with the decree, Leon made the following payments to Laura in the current tax year: Child support payments contingent on the age of the child $4,000; Indefinite periodic payments terminating on Laura's death $6,000. Assuming that Leon does not itemize his deductions, how much of the payments can he deduct as alimony in the current tax year?

answer

6000

question

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

answer

True

question

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.

answer

False

question

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

answer

False

question

Child support payments are deductible by the spouse making the payments.

answer

False

question

A noncash item that is received as a prize should be included in the taxpayer's income at its list price.

answer

False

question

Awards, bonuses, and gifts are all included in gross income.

answer

False

question

Taxpayers must report interest income on Series EE savings bonds as the interest accrues.

answer

False

question

The value of lodging provided to a professor to enable him to live near the campus is excluded from gross income.

answer

False

question

If a divorce agreement executed in the current year specifies that a portion of the amount of an alimony payment is contingent upon the status of a child, that portion is considered to be a child support payment.

answer

True

question

Dr. J's outstanding player award is not includible in income, since the award is in recognition of his outstanding performance.

answer

False

question

If an annuitant, whose annuity starting date was January 1, (5 years ago), 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

answer

True

question

Unemployment compensation is taxable to the individual receiving the compensation.

answer

True

question

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

answer

True

question

Payments made to a qualified retirement plan by an employer are considered part of the employee's investment in the contract for calculation of the annuity exclusion ratio.

answer

False

question

If an employer claims a business deduction for group health insurance premiums paid on behalf of his employees, the amount must be included in the employees' gross income.

answer

False

question

A scholarship for room and board granted in the current tax year is fully taxable to the recipient.

answer

True

question

Amounts received by an employee as reimbursement for medical expenses under a policy provided by the taxpayer's employer are excluded from gross income.

answer

True

question

Amounts received as scholarships for books and tuition may be excluded from the recipient's taxable income

answer

True

question

Payment made by an employer for health insurance on behalf of an employee are considered income to the employee at the time the payment is made.

answer

False

question

Allowances for meals or lodging generally must be included in the employee's income.

answer

True

ACC 105 – Chapter 2

Unlock all answers in this set

Haven't found what you were looking for?

Search for samples, answers to your questions and flashcards