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Exam 5: Gross Income and Exclusions

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Question 21

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This year Joseph joined the board of directors for a company.Besides his director's fees,Joseph received the following employee benefits: The stock bonus consisted of 5,000 shares of Bell stock given to Joseph as compensation.At the time of the transfer the stock was listed at $4 per share.What amounts,if any,should Joseph include in gross income this year?

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$239,000 = $204,000 + $20,000 ...

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Question 22

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Andres has received the following benefits this year. Besides these benefits Andres missed work for two months due to an illness.During his illness Andres received $6,500 in sick pay from a disability insurance policy.Assume Andres has disability insurance provided by his employer as a nontaxable fringe benefit.What amount,if any,must Andres include in gross income this year?

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$115,920 = $92,000 + $15,000 +...

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Question 23

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This year Mary received a $200 refund of state income taxes that she deducted on her tax return last year.Mary included a total of $4,000 of state income taxes when she itemized deductions last year.What amount of the refund,if any,should Mary include in her gross income this year?

Identify the rule that states that income has been realized when a taxpayer receives the income and there are no restrictions on the taxpayer's use of the income (e.g.,no obligation to repay the amount) .

The tax law defines alimony to include transfers of property (but not cash)between former spouses.

Regardless of when a divorce agreement is executed,alimony is included in gross income of the recipient and is deductible for AGI by the payer.

The all-inclusive definition of income means that gross income is defined very broadly.

Interest earned on a federal Treasury bond is excluded from gross income (for federal tax purposes).

Charles purchased an annuity from an insurance company that promised to pay him $20,000 per year for the next 12 years.Charles paid $180,000 for the annuity.How much of the first $20,000 payment should Charles include in gross income?

Which of the following describes how the annuity exclusion ratio is calculated for an annuity paid over a fixed period?

Gross income includes:

Jake sold his car for $2,400 in cash this year.He will realize a taxable gain of $1,000 if he purchased the car for $1,400.

Joyce's employer loaned her $50,000 this year (interest-free) to buy a new car.If the federal interest rate was 3 percent,which of the following is correct?

This year Kevin provided services to several clients,each of whom paid with different types of property.Which of the following payments is not included in Kevin's gross income?

Claim of right states that income has been realized if a taxpayer receives income and there are substantial restrictions on the taxpayer's use of the income.

This year Kelsi received a $1,900 refund of state income taxes that she paid last year.Last year Kelsi claimed itemized deductions of $13,100,including $2,800 of state income taxes.How much of the refund,if any,must Kelsi include in gross income if the standard deduction last year was $12,000?

Bobby and Sissy got married two and a half years ago.Since that time,they have lived in Bobby's home.Sissy sold her previous home three years ago and excluded her entire gain ($80,000)at that time.Bobby and Sissy decided to move to a bigger home this year.As a result,they sold Bobby's home for $500,000 (original cost $150,000).How much of the gain from the sale is taxable?

Gambling winnings are included in gross income only to the extent that the winnings exceed gambling losses incurred during the same period.

A portion of each payment received from a purchased annuity contract represents income.

This year Ann has the following stock transactions.What amount is included in her gross income if Ann paid a $200 selling commission for each sale?