FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 5: Gross Income and Exclusions

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 71

True/False

Review LaterAdd Note

Review Later

Excluded income will never be subject to the federal income tax.

A) True
B) False

Correct Answer

verified

Show Answer

Question 72

Multiple Choice

Review LaterAdd Note

Review Later

Opal deducted $2,400 of state income taxes on her tax return last year. This year she received a state income tax refund of $170. What amount of the refund, if any, should Opal include in her gross income if last year her total itemized deductions exceeded the standard deduction by $350?

A) $2,050
B) $350
C) $180
D) $170
E) None of the above - refunds of state income taxes are not included in gross income.

F) B) and D)
G) A) and C)

Correct Answer

verified

Show Answer

Question 73

Multiple Choice

Review LaterAdd Note

Frank received the following benefits from his employer this year. What amount must Frank include in his gross income?

Wherewithal-to-pay represents the principle that a realized transaction should require a taxpayer to sell other assets in order to pay income taxes.

Gross income includes:

Helen is a U.S. citizen and CPA, who moved to London, England three years ago to work for a British company. This year, she spent the entire year in London and earned a salary of $110,000. How much of her salary will she be allowed to exclude from gross income in the U.S.?

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? 

Robert will be working overseas on a permanent assignment for an international company beginning on March 1 of this year (306 days this year). His salary is $11,000 per month while Robert is overseas, but only $9,200 per month otherwise. What is the minimum amount of Robert's salary that he must include in gross income this year? (Round your final answer to the nearest whole dollar amount & assume that there are 365 days in this year.)

A taxpayer generally includes in gross income the amount of debt forgiven by a lender.

Wendell is an executive with CFO Tires. At the beginning of this year the corporation loaned Wendell $50,000 at an interest rate of one percent. Wendell would have paid interest of $2,500 this year if the interest rate on the loan had been set at the prevailing Federal interest rate. Wendell used the funds as a down payment on a vacation home and during the year he paid $500 of interest to CFO. On December 31, CFO forgave the loan and remaining interest. What amount of gross income does Wendell recognize from the loan this year?