552. CHAPTER 5GROSS INCOME: EXCLUSIONS Question MC #1 The taxpayer’s marginal tax bracket is 25%. Which would the taxpayer prefer?
a. $1.00 taxable income rather than $1.00 tax-exempt income.
*b. $.80 tax-exempt income rather than $1.00 taxable income.
c. $1.25 taxable income rather than $1.00 tax-exempt income.
d. $1.30 taxable income rather than $1.00 tax-exempt income. e. None of the above.
553. CHAPTER 5GROSS INCOME: EXCLUSIONS Question MC #2 Cash received by an individual:
a. Is not included in gross income if it was not earned. b. Is not taxable unless the payor is legally obligated to make the payment.
c. Must always be included in gross income.
*d. May be included in gross income although the payor is not legally
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Ali, a customer, died owing Swan $1,500. The balance due included $200 accrued interest that Swan has included in income. When Swan collects $1,500 from the insurance company, Swan:
a. Must recognize $1,500 income from the life insurance proceeds. b. Must recognize $1,300 income from the life insurance proceeds. c. Does not recognize income because life insurance proceeds are tax-exempt. *d. Does not recognize income from the life insurance because the entire amount is a recovery of capital. e. None of the above.
559. CHAPTER 5GROSS INCOME: EXCLUSIONS Question MC #8 Ben was diagnosed with a terminal illness. His physician estimated that Ben would live no more than 18 months. After he received the doctor’s diagnosis, Ben cashed in his life insurance policy to pay some medical bills. Ben had paid $12,000 in premiums on the policy, and he collected $50,000, the cash surrender value of the policy. Henry enjoys excellent health, but he cashed in his life insurance policy to purchase a new home. He had paid premiums of $12,000 and collected $50,000 from the insurance company.
a. Neither Ben nor Henry is required to recognize gross income.
b. Both Ben and Henry must recognize $38,000 ($50,000 – $12,000) of gross income. *c. Henry must recognize $38,000 ($50,000 – $12,000) of gross income, but Ben does not recognize any gross income.
d. Ben must recognize $38,000 ($50,000 – $12,000) of gross income, but Henry does not recognize any gross
32. Which of the following amounts must be included in the gross income of the recipient?
i. The gross income information from Jessie Robinson's W-2 form. TIP: This is the amount from question 7b above.
c. Fill out the Refund section by performing the calculations if the IRS owes Jessie Robinson money. Do not fill out the bank account information section.
However, they fail to distinguish between the initial question of economic outlay and the secondary issue of debt or equity. Only if the first question had an affirmative answer would the second arise. The tax court correctly determined that the appellant’s guarantees in itself have not constituted contributions of cash or other property which might increase the bases of the appellant’s stock.
18) Barbara sells a house with an FMV of $170,000 to her daughter for $120,000. From this transaction, Barbara is deemed to have made a gift (before the annual exclusion) of
Cindy Chan paid $10 more than she owed when she was seeing Dr. Hughes. Refund her money using check #5654. 29. Carter Graves decided to postpone his knee surgery when his wife suddenly became ill. Use check #5655 to refund his $500 deposit. 30. Determine the balance of the checking account after the funds in questions 26 to 29 have been deducted.
Nothing is included in Decedent’s gross income, because under section 2035(d), Subsection (a) and paragraph (1) of subsection (c) shall not apply to any bona fide sale for an adequate and full consideration in money or money’s worth.
c. What is your determination regarding reducing the taxable amount of income for both (a) and (b) above?
In the case of a transfer for a valuable consideration, by assignment or otherwise, of a life insurance contract or any interest therein, the amount excluded from gross income by paragraph (1) shall not exceed an amount equal to the sum of the actual value of such consideration and the premiums and other amounts subsequently paid by the transferee. The preceding sentence shall not apply in the case of such a transfer -
Code Section 704(c)(1)(B) covers distributions of contributed property to another partner. Under this code section, if contributed property is distributed within seven years of the contribution date, the contributing partner must recognize some or all of the built in gain that was deferred at the date of contribution. In the case of Boxes, LLC, the distribution occurs 4 years after the contribution, so Bobby is subject to the recognition provisions.
4. What is the amount that was credited to Group Insurance Premiums Collected (account number 27) during this period?
Cory currently has $76,000 (2 x $38,000) of term life insurance through his employer. Consequently, Cory should consider purchasing approximately $293,000 of additional life insurance coverage. Tisha has $69,000 of term insurance through her employer, as well as a whole life policy of $50,000. She should consider purchasing an additional $328,000 of life insurance coverage ($447,065 – $119,000). While Tisha or Cory
B. The money that is collected is put in a trust fund that provides a monthly income for retired workers.
9. She got the 51% of the equity where as she only had to invest 25% of the total amount being invested
| Except the following, all other incomes shall be included— a. Income exempt under sections 10 to 13A; b. Incomes to be included in