AC 371 Chapter 5 Learnsmart With
Questions And Answers Guaranteed Pass
Sam traded a parcel of land for a tractor and a car. He had
purchased the land five years earlier for $16,000. The market
value of the car and tractor is $20,000. What is the amount of
gross income resulting from this transaction?
a. $4,000
b. $20,000
c. $0
d. $16,000 - ANSWER>>>A
Mary has received the following income and fringe benefits
during the current year: a $73,000 salary; $600 in employer-
provided disability premiums; $5,000 in workers; compensation;
$1,200 in corporate bond interest; a $23,000 car won on a game
show; and a $1,200 health insurance reimbursement for medical
expenses paid during the year. Which of these amounts should
Mary include in her gross income?
a. $1,200 health insurance reimbursement
b. $1,200 corporate bond interest
c. $5,000 workers' compensation
d. $600 disability premiums
e. $73,000 salary - ANSWER>>>B/E
Gross income means all income from _______ _________
__________ - ANSWER>>>Whatever/Source/ Derived
Which of the following statements is correct concerning a gift?
,a. A gift is included in the gross income of the person giving the
gift
b. A gift is included in the gross income of the person receiving
the gift
c. A gift may be subject to "gift tax" which is paid by the person
receiving the gift
d. A gift may be subject to "gift tax" which is paid by the person
giving the gift - ANSWER>>>D
In general, when a taxpayer's debt is discharged by a lender, the
taxpayer's gross income will _____ the amount forgiven. -
ANSWER>>>Increase
Which of the following cash receipts are taxable to the
recipient?
a. Gambling winnings
b. Prizes
c. Child support
d. Loan Proceeds
e. Awards - ANSWER>>>A/B/E
For below-market-loans, the discounted interest rate is treated as
interest _____ to the lender and interest _____ to the borrower. -
ANSWER>>>Income/Expense
Which of the following types of imputed income are NOT
included in gross income (i.e. are NOT taxable)?
a. A bargain purchase between a father and his son
b. An employer's $12,000 loan to an employee with no interest
on the note
c. Employee discounts of 25% on services - ANSWER>>>A
, A bargain purchase between family members is generally
deemed to be a gift, thus nontaxable to the recipient
Chad has received the following income and benefits during the
current year: $65,000 salary, $4,800 employer-provided health
insurance, $1,500 municipal bond interest, $2,000 dividend
income, $500 from a partnership, and a $10,000 judgement for
lost wages due to an age discrimination lawsuit. What amounts
should Chad include in his gross income?
a. $2,000 dividend income
b. $500 partnership income
c. $4,800 health insurance
d. $1,500 municipal bond interest
e. $10,000 judgement
f. $65,000 salary - ANSWER>>>A/B/E/F
Frick and Frack are equal partners in F&F Industries. The
company generated net income of $60,000 during the year and
distributed $7,000 cash to both Frick and Frack. How much
income should Frack report on his individual income tax return
due to the partnership interest? - ANSWER>>>$30,000
Distributions to partners are not taxable. Only the portion of the
net income allocable to the partner is taxable.
Which of the following fringe benefits provided by an employer
is NOT excluded from gross income?
a. Medical insurance
b. Group life insurance coverage in excess of $50,000
c. Qualified transportation expenses
Questions And Answers Guaranteed Pass
Sam traded a parcel of land for a tractor and a car. He had
purchased the land five years earlier for $16,000. The market
value of the car and tractor is $20,000. What is the amount of
gross income resulting from this transaction?
a. $4,000
b. $20,000
c. $0
d. $16,000 - ANSWER>>>A
Mary has received the following income and fringe benefits
during the current year: a $73,000 salary; $600 in employer-
provided disability premiums; $5,000 in workers; compensation;
$1,200 in corporate bond interest; a $23,000 car won on a game
show; and a $1,200 health insurance reimbursement for medical
expenses paid during the year. Which of these amounts should
Mary include in her gross income?
a. $1,200 health insurance reimbursement
b. $1,200 corporate bond interest
c. $5,000 workers' compensation
d. $600 disability premiums
e. $73,000 salary - ANSWER>>>B/E
Gross income means all income from _______ _________
__________ - ANSWER>>>Whatever/Source/ Derived
Which of the following statements is correct concerning a gift?
,a. A gift is included in the gross income of the person giving the
gift
b. A gift is included in the gross income of the person receiving
the gift
c. A gift may be subject to "gift tax" which is paid by the person
receiving the gift
d. A gift may be subject to "gift tax" which is paid by the person
giving the gift - ANSWER>>>D
In general, when a taxpayer's debt is discharged by a lender, the
taxpayer's gross income will _____ the amount forgiven. -
ANSWER>>>Increase
Which of the following cash receipts are taxable to the
recipient?
a. Gambling winnings
b. Prizes
c. Child support
d. Loan Proceeds
e. Awards - ANSWER>>>A/B/E
For below-market-loans, the discounted interest rate is treated as
interest _____ to the lender and interest _____ to the borrower. -
ANSWER>>>Income/Expense
Which of the following types of imputed income are NOT
included in gross income (i.e. are NOT taxable)?
a. A bargain purchase between a father and his son
b. An employer's $12,000 loan to an employee with no interest
on the note
c. Employee discounts of 25% on services - ANSWER>>>A
, A bargain purchase between family members is generally
deemed to be a gift, thus nontaxable to the recipient
Chad has received the following income and benefits during the
current year: $65,000 salary, $4,800 employer-provided health
insurance, $1,500 municipal bond interest, $2,000 dividend
income, $500 from a partnership, and a $10,000 judgement for
lost wages due to an age discrimination lawsuit. What amounts
should Chad include in his gross income?
a. $2,000 dividend income
b. $500 partnership income
c. $4,800 health insurance
d. $1,500 municipal bond interest
e. $10,000 judgement
f. $65,000 salary - ANSWER>>>A/B/E/F
Frick and Frack are equal partners in F&F Industries. The
company generated net income of $60,000 during the year and
distributed $7,000 cash to both Frick and Frack. How much
income should Frack report on his individual income tax return
due to the partnership interest? - ANSWER>>>$30,000
Distributions to partners are not taxable. Only the portion of the
net income allocable to the partner is taxable.
Which of the following fringe benefits provided by an employer
is NOT excluded from gross income?
a. Medical insurance
b. Group life insurance coverage in excess of $50,000
c. Qualified transportation expenses
