1. A taxpayer is the sole beneficiary of two life insurance policies:

$ 300,000	Policy on aunt
$ 200,000	Policy on brother

Both the taxpayer's aunt and brother died unexpectedly this year. The taxpayer accepts his brother's $200,000 life insurance policy proceeds as a lump sum and elects to receive aunt's $300,000 policy in 24 installments of $15,000 each. If the taxpayer receives the $200,000 in a lump sum and only four of the 24 payments from the $300,000 in the current year, what amount, if any, is taxable this year?

a. $0

b. $10,000

c. $60,000

d. $260,000

2. A child, age five, is claimed as a dependent on the parents' tax return. The child has $3,000 of interest income, no earned income this year, and will file a tax return. Assuming the current applicable standard deduction is $1,100, how much of the child's income will be taxed at the parents tax rates?

a. $800

b. $1,900

c. $2,200

d. $3,000

3. During the current year, an individual who owns 100% interest in two rental real estate properties reports the following items:

Loss from rental estate Property A (materially participates and performed 800 hours of service)	($20,000	)
Loss from rental real estate Property (actively participates)	($48,000	)
Income from limited partnership (no material participation	$12,000
Income from dividends	$15,000

What amount of the $68,000 loss may the taxpayer deduct this year?

a. $20,000

b. $27,000

c. $32,000

d. $47,000