TAX! from practice exams

Cheryl is claimed as a dependent by her parents. She had a part time job during 2018 and earned $4,900 during the year, in addition to $600 of interest income. What is her standard deduction?

C. 5250

Which of the following dependent relatives does not have to live in the same household as the taxpayer who is claiming head of household filing status? a. uncle b. brother c. father d. nephew

C. Father

Edward, a widower whose wife died in 2015, maintains a household for himself and his 10 year old daughter. Edward's most favorable filing status for 2018 is

C. Head of household

Which of the following advance payments cannot qualify for income tax deferral?

C. advance collection of rent without associated services

Frasier and Marcella, husband and wife, file separate returns. Frasier and Marcella live in a community property state that considers separate property income to be separate. Frasiers salary is $42,000 and Marcellas salary is $46,000. Marcella receives dividend income of $4,000 from stock inherited from her parents. Frasier receives interest income of $1,000 from bonds purchased with his salary after marriage. Frasier and Marcella receive $3,200 dividend income from stock they purchased jointly. Marcellas income would be

$50,100 add all the extra incomes together and divide by 2 and get 4100 extra a person added to their respective salaries

Lewis, who is single, is claimed as a dependent by his parents. He received $2,000 during the year in dividends, which was his only income. What is his standard deduction for 2018?

1,100

Tyler has rented a house from Camarah since last year. The rent is usually $1,200 per month, but Camarah reduced the monthly rent down to $200 for all twelve months this year in exchange for Tyler putting in an inground pool in the backyard. The improvement has a fair market value of $20,000. How much total rental income must Camarah report this year?

22,400

CT corporation, a cash based taxpayer, sells service contracts on the compute it sells. At the beginning of January this year, CT corporation sold contracts with service to begin immediately: one for three months: 200 one for 20 months: 800 one for 48: 4000 amount of income CT must report this year

5000

A taxpayer had the following income and losses in the current year: salary - 55000 sold at&t stock at loss -(5000) lottery prize - 4500 gambling winnings - 8000 gambling losses - (5000) What is the taxpayer's adjusted gross income?

64,500 capital loss deduction is limited to 3000.

26) Julia owns 1,000 shares of Orange Corporation. This year, Orange declared a 10% stock dividend. There was no option for shareholders to receive cash. When Julia received 100 shares of Orange stock, it had a fair market value of $50 a share. How much income does Julia have from the dividend?

A. 0

Greg is the owner and beneficiary of a $100,000 policy on the life of his mother. Greg gives the policy to his brother, Don. Don subsequently pays premiums of $40,000. Upon his mothers death, how much of the insurance proceeds must Don include in income?

A. 0

this year, jonathan sold some qualified small business stock that he acquired in december 2010. his basis in the stock was $100,000 and he sold it for a $300,000 gain. how much of jasons gain is taxable?

A. 0 not sure why

For a taxpayer who is not insolvent nor under bankruptcy proceedings, the discharge of debt is generally

A. Taxable

Amy's employer provides her with several fringe benefits. Which of the following are included in her taxable income? a. year end bonus check b. group term life insurance premium paid by employer for $40,000 coverage for Amy c. employee discount d. employer's contribution to retirement plan on amy's behalf

A. year end bonus check

Anita, who is divorced, maintains a home in which she and her 16 year old daughter live. Anita provides the majority of the support for her daughter and for a son, age 23, who is enrolled part-time at the university and lives in the dorm. The son also works in the campus bookstore and earns spending money of $4500. Which of the following statements is correct regarding the number of dependents Anita can claim?

Anita can claim her daughter, but not her son.

Hope receives an $18,500 scholarship from State University. The university specifies that $8500 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:

B. 15,000

All of the following items are deductions for adjusted gross income EXCEPT: a. deductible alimony for pre 2019 agreement b. state income taxes c. qualifying contributions to individual retirement accounts d. one half of self employment taxes on year's earnings

B. state income taxes

Carla redeemed EE bonds which qualify for the educational exclusion. The redemption consisted of $14,000 principal and $6,000 interest. The net qualifying educational expenses are $10,000. Her AGI is below the threshold for phase-out of the exclusion. The taxable interest is

C 3000

Thomas purchased an annuity for $20,000 that will pay him $500 per month for ten years. What amount should Thomas include in his income each year?

C. 4000

Mac Li is beneficiary of a $70,000 insurance policy on her father's life. Upon his death, she elects to receive the proceeds in installments from the insurance company that carries the policy. She will receive $16,000 per year for five years. What are the tax consequences each year?

D. 2000 of the 16000 payment is taxable each year

Amanda, who lost her modeling job, sued her employer for age discrimination. She was awarded $75,000 in lost wages, $25,000 for emotional distress, and $150,000 punitive damages. The amount taxable is

D. 250,000

All of the following items are included in gross income EXCEPT: A. pension benefits received B. rent income C. interest earned on a bank account D. child support payments received.

D. Child support payments received

To qualify as an abandoned spouse, the taxpayer is NOT required to: a. be a US citizen or resident b. live apart from the spouse for the last six months of the year. c. pay more than half the cost of maintaining the home. d. have a son or daughter in the home for the entire year.

D. Have a son or daughter in the home for the entire year.

The regular standard deduction is available to which one of the following taxpayers? a. a married taxpayer filing a separate return where the other spouse itemizes b. a person who has only unearned income and is a dependent of another c. a nonresident alien d. none of the above

D. None of the above

Insurance proceeds received because of the destruction of property are

D. included in gross income only to the extent the proceeds exceed the adjusted basis of the replacement property.

Dependent standard deduction

Greater of: 1100 OR $350 plus earned income

Under the terms of their divorce agreement executed in August of this year (this is from 2018) , Clint transferred Beta, Inc. stock to his former wife, Rosa, as a property settlement. At the time of the transfer, the stock had a basis to Clint of $55,000 and a fair market value of $68,000. Rosa subsequently sold the stock for $75,000. What is the tax consequence of first the stock transfer and then the sale to Rosa?

Rosa's income from stock transfer: $0 Rosa's income from stock sale: $20,000 capital gain

Speak Corporation, a calendar-year, accrual-basis taxpayer, sell packages of foreign langauge lessons to individuals planning to work overseas. In December 2018, it sold and received payment for $600,000 of 24-month lesson packages to be provided evenly through 2019 and 2020. Speak Corporation will recognize the $600,000 of income

all in 2019 not sure why

On June 1, 2018, Ellen turned 65. Ellen has been a widow for five years and has no dependents. Her standard deduction is

c. 13,800 She is 65 and unmarried, so she has an extra deduction amount of $1600.

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)? 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.

c. payment of eyecare coverage

All of the following are excluded from gross income except: a. working condition benefits b. de minimis benefits c. no additional cost benefits for employees d. disability income from an employer financed policy

d. disability income from an employer financed policy