SU 4: Self-Employment, Farming, and Adjustments
John Budd files a joint return with his wife. Budd's employer pays 100% of the cost of all employees' group term life insurance under a qualified plan. Under this plan, the maximum amount of tax-free coverage that may be provided for Budd by his employer is
50,000
Frank Clarke, an employee was covered under a noncontributory pension plan. Frank died on April 15, 2014, at age 64 and, pursuant to the plan, his widow received monthly pension payments of $500 beginning May 1, 2014. Mrs Clarke also received an employee death payment of 10,000 in May 2014. How much should she include in her gross income for 2014?
14,000
Schedule C
Business Income
Schedule D
Capital Gains and Losses
1120
Corporations
Schedule B
Dividends and Interest
Schedule F
Farm Income
Schedule A
Itemized Deductions (From AGI)
Mock operates a retail business selling illegal narcotic substances. When Mock calculates business income, he may adjust for I. Cost of merchandise II. Business expenses other than the cost of merchandise
I. Cost of merchandise
1040
Individuals
Itemized Deductions (UNIT 5)
Medical expenses Taxes Interest Charitable contributions Casualty and theft losses Job expenses and miscellaneous deductions Other miscellaneous deductions
Under a "cafeteria plan" maintained by an employer
Participants may select their own menu of benefits
1065
Partnerships Information Return
Schedule E
Rental Income
Which of the following may use income averaging for farming?
S corporation shareholder
1120 S
S corporations
In 2010, Ross was granted an incentive stock option (ISO) by his employer as part of an executive compensation package. Ross exercised the ISO in 2012 and sold the stock in 2014 at a gain. Ross's profit was subject to the income tax for the year in which the
Stock was sold
Recasto owns a second residence that is used for both personal and rental purposes. During 2014, Recasto used the second residence for 50 days and rented the residence to Louis for 200 days. Which of the following statements is true?
Utilities and maintenance on the property must be divided between personal and rental use
Howard, an employee of Ogden Corporation, died on June 30, 2014. During July, Ogden made employee death payments of $10,000 to his widow and $10,000 to his 15-year-old son. What amounts should be included in gross income by the widow and son in their respective tax returns for 2014?
Widow- 10,000 Son 10,000
The self-employment tax is
partially deductible from gross income in arriving at adjusted gross income.
An employee who has had Social Security tax withheld in an amount greater than the maximum for a particular year may claim
the excess as a credit against income tax, if that excess resulted from correct withholding by two or more employers.