Income Tax Fundamentals 2023 41st Edition By Gerald
Whittenburg, Steven Gill
The Nature of Gross Income
The definition of gross income in the tax law is: - ANSWER CORRECT ANSWER D
a.All items specifically listed as income in the tax law.
b.All income from whatever source derived unless the income is earned illegally.
c.All cash payments received for goods provided and services performed.
d.All income from whatever source derived.
The Nature of Gross Income
Which of the following is not taxable for income tax purposes? - ANSWER
CORRECT ANSWER D
a.Prizes.
b.Severance pay.
c.Partnership income.
d.Gifts.
e.All of these choices are taxable.
The Nature of Gross Income
All of the following items are taxable to the taxpayer receiving them, EXCEPT: -
ANSWER CORRECT ANSWER E
a.Unemployment compensation.
b.Embezzled funds.
c.Prizes.
d.Gambling winnings.
e.Life insurance proceeds paid at death.
Community Property
Which of the following condition need NOT be satisfied in order for a married
taxpayer, residing in a community property state, to be taxed only on his or her
separate salary? - ANSWER CORRECT ANSWER C
a.The husband and wife must not transfer earned income between themselves.
b.The husband and wife must not file a joint income tax return.
c.A minor child must be living with the spouse.
d.The husband and wife must live apart for the entire year.
e.All of these choices must be satisfied.
Community Property
, Dana and Larry are married and live in Texas. Dana earns a salary of $45,000 and
Larry had $25,000 of rental income from his separate property. If Dana and Larry file
separate tax returns, what amount of income must Larry report? - ANSWER
CORRECT ANSWER E
a.$22,500
b.$0
c.$25,000
d.$47,500
e.None of these choices are correct.
Social Security Benefits
Generally, modified adjusted gross income (MAGI) is adjusted gross income (without
Social Security benefits) - ANSWER CORRECT ANSWER B
a.Less tax-exempt interest.
b.Plus tax-exempt interest income.
c.Less itemized deductions.
d.Less tax-exempt interest plus any foreign income exclusion.
Social Security Benefits
For 2019, the minimum percentage of Social Security benefits that could be included
in a taxpayer's gross income is: - ANSWER CORRECT ANSWER C
a.50%
b.85%
c.0%
d.75%
e.25%
Unemployment Compensation
Alicia loses her job part way through 2019. Her employer pays her wages of $15,450
up through her date of termination. After that, she received $3,400 of unemployment
compensation from the state until she gets a new job for which she is paid wages of
$3,000 through year end. Based on this information, Alicia's gross income for 2019
is: - ANSWER CORRECT ANSWER C
a.$18,450
b.$0
c.$21,850
d.$6,400
e.$3,000
Educational Incentives
Whittenburg, Steven Gill
The Nature of Gross Income
The definition of gross income in the tax law is: - ANSWER CORRECT ANSWER D
a.All items specifically listed as income in the tax law.
b.All income from whatever source derived unless the income is earned illegally.
c.All cash payments received for goods provided and services performed.
d.All income from whatever source derived.
The Nature of Gross Income
Which of the following is not taxable for income tax purposes? - ANSWER
CORRECT ANSWER D
a.Prizes.
b.Severance pay.
c.Partnership income.
d.Gifts.
e.All of these choices are taxable.
The Nature of Gross Income
All of the following items are taxable to the taxpayer receiving them, EXCEPT: -
ANSWER CORRECT ANSWER E
a.Unemployment compensation.
b.Embezzled funds.
c.Prizes.
d.Gambling winnings.
e.Life insurance proceeds paid at death.
Community Property
Which of the following condition need NOT be satisfied in order for a married
taxpayer, residing in a community property state, to be taxed only on his or her
separate salary? - ANSWER CORRECT ANSWER C
a.The husband and wife must not transfer earned income between themselves.
b.The husband and wife must not file a joint income tax return.
c.A minor child must be living with the spouse.
d.The husband and wife must live apart for the entire year.
e.All of these choices must be satisfied.
Community Property
, Dana and Larry are married and live in Texas. Dana earns a salary of $45,000 and
Larry had $25,000 of rental income from his separate property. If Dana and Larry file
separate tax returns, what amount of income must Larry report? - ANSWER
CORRECT ANSWER E
a.$22,500
b.$0
c.$25,000
d.$47,500
e.None of these choices are correct.
Social Security Benefits
Generally, modified adjusted gross income (MAGI) is adjusted gross income (without
Social Security benefits) - ANSWER CORRECT ANSWER B
a.Less tax-exempt interest.
b.Plus tax-exempt interest income.
c.Less itemized deductions.
d.Less tax-exempt interest plus any foreign income exclusion.
Social Security Benefits
For 2019, the minimum percentage of Social Security benefits that could be included
in a taxpayer's gross income is: - ANSWER CORRECT ANSWER C
a.50%
b.85%
c.0%
d.75%
e.25%
Unemployment Compensation
Alicia loses her job part way through 2019. Her employer pays her wages of $15,450
up through her date of termination. After that, she received $3,400 of unemployment
compensation from the state until she gets a new job for which she is paid wages of
$3,000 through year end. Based on this information, Alicia's gross income for 2019
is: - ANSWER CORRECT ANSWER C
a.$18,450
b.$0
c.$21,850
d.$6,400
e.$3,000
Educational Incentives
