Question
1. T/F. Damages are taxable if they are paid on account of personal injuries that are not physical injuries, such as discrimination, breach of promise,
1. T/F. Damages are taxable if they are paid on account of personal injuries that are not physical injuries, such as discrimination, breach of promise, invasion of privacy and harassment.
2. T/F. Social security benefits are never taxable since taxpayers had paid in their shares of social security tax while they worked as employees.
3. T/F. A cash basis taxpayer purchased a certificate of deposit for $1,000 on July 1, 2019 that will pay $1,100 upon its maturity on June 30, 2021. The taxpayer does not need to recognize any income in 2019 since the taxpayer does not receive any income in 2019. The taxpayer is on cash basis for tax purposes.
4. T/F. When compensation for services is paid for in property, the recipient should use the higher of fair market value of the property received or his normal charge rate to come up with the amount of compensation that should be included in his gross income, because it will produce higher taxes.
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