1. Alex paid $90,000 for a single-life annuity. He will receive $7,000 per year for 20 years, his life expectancy according to Treasury Department. How much taxable income from the annuity must he report each year? Show and label calculations.

2. All the following are true about nontaxable employee fringe benefits, except

		There are no dollar limits on the amount of nontaxable fringe benefits.
		They are deductible by the employer as business expenses.
		The fringe benefit plan must be nondiscriminatory.
		If the employee takes cash instead, the fringe benefit is taxable.

3. The U.S. income tax system is a

		Regressive Tax System
		Progressive Tax System
		Proportional Tax System
		None of the Above

4. The following statements are true about business expenses, except

		They must be necessary.
		They must be ordinary.
		They must be reasonable.
		They must be paid in U.S. dollars.