Question
1-Jim and Sarah are married and both work full-time. Jims employer sells sporting equipment and outfitting but gives employees a 20% discount. Jim buys $600
1-Jim and Sarah are married and both work full-time. Jims employer sells sporting equipment and outfitting but gives employees a 20% discount. Jim buys $600 of his employers merchandise during the year for a total amount of $480; the employer's cost of the merchandise is $350. Sarahs employer is a gardening and landscaping company and performs outdoor work on the couples property with a value of $500 free of charge. Which of the following statements correctly characterizes the tax effects of these discounts?
Question options:
| Both employee discounts are completely excludable by Jim and Sarah |
| Jim's discount is excludable but Sarah's discount is partially taxable |
| Both Jim and Sarah's discounts are partially taxable |
| Neither Jim nor Sarah's discounts are excludable |
2-Question options:Mary (age 65) is an unmarried taxpayer who currently supports her 16 year old granddaughter who lives with her. Mary's husband Jack died in 2019. Mary has itemized deductions totaling $17,000 for the 2020 tax year. Which of the following statements correctly characterizes Mary's tax situation in 2020?
| Mary is an unmarried taxpayer filing as "single" and will choose to itemize deductions rather than taking the standard deduction |
| Mary is an unmarried taxpayer filing as "head of household" and will choose to itemize deductions rather than taking the standard deduction |
| Mary is an unmarried taxpayer filing as "head of household" and will choose the standard deduction rather than taking the itemized deductions |
| Mary is an unmarried taxpayer filing as "Qualifying Widow/Surviving Spouse" and will choose the standard deduction rather than taking the itemized deductions |
3-Question options:Tim, age 20 and a full-time student, is a dependent of his parents. During 2020, he had $13,000 of wages from a part-time job. The amount of his standard deduction is __________
| $1,100 |
| $12,400 |
| $13,350 |
| some other amount |
4-Question options:Which of the following refunds received are taxable income?
| Julia and Jim paid local property taxes of $5,000 in 2019 but challenged their assessment and received a refund of $800 of those taxes in 2020. The couple did not itemized their deductions on the federal tax return for 2019. |
| During 2020, Laura received a refund from a department store credit card because of being overcharged on purchases of non-deductible consumer items during 2019. |
| During 2020, Ajax Leasing received a $5,000 refund from a law firm that represented Ajax in business litigation during 2019. The original payment of $30,000 was treated as a business expense on Ajax's 2019 federal tax return. |
| None of the above are taxable refunds |
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