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Exam 3: Gross Income: Inclusions

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Question 71

Multiple Choice

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Lily had the following income and losses during the current year: What is Lily's adjusted gross income?

A) $135,000
B) $143,000
C) $165,000
D) $173,000

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Question 72

Multiple Choice

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Hoyt rented office space two years ago to Harris,receiving the first and last months' rent plus a security deposit of $1,000.In early January of this year,Harris moves and Hoyt refunds $250 of the deposit and keeps the remainder to cover $500 which is spent for repairs to the office space and one week of unpaid rent that amounts to $250.How would this information be reflected on Hoyt's tax return this year?

A) $750 income and $500 deduction
B) $750 income and no deduction
C) $250 income and $500 deduction
D) No income is recognized, but a $250 deduction is allowed.

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Question 73

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Gregory receives 100 shares of stock from his employer as a year-end bonus.The fair market value of the stock is included in Gregory's income for the year.

Tarik,a single taxpayer,has AGI of $55,000 which includes $1,000 of qualified dividends.Tarik has $7,000 of itemized deductions.What is his 2017 federal income tax?

While certain income of a minor is taxed at the parent's tax rate,discuss how income shifting may still be accomplished and any constraints that may exist on income shifting.

Improvements to leased property made by a lessee are includible in the lessor's gross income only if made in lieu of rent or if rent is reduced because of the improvements.

David,age 62,retires and receives $1,000 per month annuity from his employer's qualified pension plan.David made $65,000 of after-tax contributions to the plan prior to his retirement.Under the simplified method,David's number of anticipated payments is 260.What is the amount includible in income in the first year of withdrawals assuming 12 monthly payments?

In community property states,income from separate property owned before marriage is always considered separate income after marriage.

Qualified dividends received by individuals are taxed at the same rate as ordinary income.

Lori had the following income and losses during the current year: What is Lori's adjusted gross income?

In order to be treated as alimony for tax purposes,payments must be made in cash.

Norah,who gives music lessons,is a calendar-year taxpayer using the cash-basis method of accounting.On October 1 of this year,she received $1,200 for a one-year contract beginning on that date to provide 10 lessons.She gave 6 lessons this year.How much should Norah include in income this year?

Carolyn,who earns $400,000,is required to pay John,her ex-husband,$200,000 as part of the property settlement as a result of their divorce.In turn,John transfers stock worth $50,000 to Carolyn.What is the amount of Carolyn's adjusted gross income for the year?

Distributions from corporations to the shareholders in a nonliquidating distribution will usually be classified as a dividend up to the amount of the corporation's

The cash receipts and disbursements method of accounting is used by most individual taxpayers and most noncorporate businesses that do not have inventories.

Which of the following bonds do not generate tax-exempt federal income?

The requirements for a payment to be considered as alimony include all of the following except

Mike won $700 in a football pool.This amount is not taxable.

During 2016,Christiana's employer withheld $1,500 from her wages for state income taxes.She claimed the $1,500 as an itemized deduction on her 2016 federal income tax return which included $9,000 of itemized deductions.Christiana is single.On her 2016 state income tax return,her state income tax was $900.As a result,Christiana received a $600 refund in 2017.What amount must Christiana include in income in 2017?

For federal income tax purposes,income is allocated between a husband and wife depending on the state of residence.