32. Jim and Joan are married and both are age 70. They have adjusted gross income of $42,000 and social security benefits of $6,000. The amount of the social security benefits included in income is a. So c. $3,850 b. $2,000 d. $6,000 33. For the current tax year, Barry and Lena have AGI of $22,000 and $10,000 in social security benefits. Determine the taxable amount of social security. a. So c. $8,500 b. $5,000 d. $10,000 34. Grady paid $50,000 for an annuity. Monthly payments of $400 were expected for 20 years. In the first year, he received $3,600. How much of the $3,600 was included in his income? a. $2,000 c. SO b. $3,600 d. $1,725 35. Income received from all sources, except income that is specifically tax exempt by the Internal Revenue Code is called... a. Net income c. Bequests b. Income tax d. Gross income 36. Which of the following statements regarding the "kiddie tax" is correct? a. The kiddie tax only applies if the dependent child is 14 years of age or older by year end. b. Under the kiddie tax, the child's net unearned income is taxed at trust and estate tax rate levels. c. The kiddie tax applies only to income generated by an asset received from the child's parents. d. Only unearned income from assets transferred to the child during the current and prior 5 year period is subject to the kiddie tax. 37. Which of the following sources of income is tax exempt? a. Salaries c. Rents b. Gifts d. Dividends 38. Maggie is 65 and is owner and autant under an annuity contract the begins this year, making annuity payments of $9.000 per year for lite with 10 years certain. If Maggie's investment in the contract she has owned for 9 years is $100,000, her life expectancy under the regulations 15 20 years, and the actuarial value of the 10 year guarantee is $6,000. (i.e., refund feature) what is the amount of the annuity payment that could be excluded from Maggie's gross income each year? a. $4,504 c. $5,000 b. $4,700 d, $5,172 39. J is injured and receives $3,000 of income from a disability policy. J's employer paid 75% of the policy premiums and J paid the remainder. In addition, J's 557x200 employer has paid all the premiums on a health policy which paid J's doctor bills of $1,000. How much of the benefits must J include in income? a. So $2,250 b. $4,000 d. $750 40. Edith Cook, age 35, redeemed qualified U.S. Savings Bond during the year to pay the $5,000 tuition cost associated with completing her college education at the local University. She received $10,000 from the bonds, of which $3,000 was interest. What amount of interest income is taxable to Edith? a. $1,000 c. $5,000 b. $3,000 d. $1,500 41. Mr. Wright, an electrician, was injured in an accident during the course of his employment. As a result of the injuries sustained, he received the following payments during the year: Damages for personal injuries...........$8,000 Workmen's compensation...............$3,000 Reimbursement from an employer sponsored accident and health plan......$1,000 The amount to be included in Mr. Wright's gross income should be a. $0 c. $4,000 b. $1,000 d. $9,000 42. Katie was injured in an automobile accident while traveling to work. Her physician advised her to undergo a comprehensive rehabilitation program for the injuries sustained in the accident. The ensuing lawsuit resulted in Katie receiving the following amounts in settlement: Compensation for lost wages $40,000 Personal Physical Injuries Damages $75,000 Punitive Damages $40,000 How much of Katie's settlement is included in gross income? a. $80,000 b. $40,000 c. $75,000 d. $115,000 TRUE-FALSE: Circle Tor F to indicate your answer. TF 43. When taxable bonds are sold between interest dates, both seller and buyer disregard the accrued interest in determining the selling price and cost. T F 44. Joan and Ted were previously married to each other. Now Divorced, they share the same condominium. Ted pays Joan $400 monthly. The monthly payment is alimony for tax purposes. MULTIPLE CHOICE: Fill in the blank with your selection 45. Jim and Rhonda are divorced. Rhonda received payments characterized as alimony as follows: year one - $36,000; year two - $18,000; year three - $3,000. How much of the second year payment must Jim recapture as non-alimony? a. $20,000 c. $18,000 b. $0 d. $9,000 46. H and W divorce in 2018. As a result, H must pay alimony of $25,000 per year and relinquish the house and car valued at a total of $75,000 and which cost $70,000 as a property settlement. The result of these transactions to H is a first-year deduction of: a. $100,000 c. $75,000 b. $95,000 d. $25,000 47. The following items were received by an individu Laxpuyer as court awards and damages. All of the following are included in eross income EXCEPT: a. Compensation for lost wages b. Compensatory damages for personal physical injury c. A damage award for a breach of contract d. Interest income on a damage award for a breach of contract 48. Maria is age 24. She has interest income of $3,000. How much of Maria's income can be claimed on her parents' return? a, so c. $2,000 b. $1,000 d. $3,000 49. The price at which property would change hands in an arm's length transaction is called... a. Fair market value c. Carrying value b. Sale price d. Book value 50. The standard deduction for a married taxpayer who files a separate return if her/his partner (spouse) itemizes her/his deductions is: a. $0 b. Half of the standard deduction for both c. One third of the standard deduction for both d. $24,000 51. All of the following situations concerning the income tax treatment of an employer provided accident and health plan represent excludable income to an employee EXCEPT: a Jay loses a limb when a platform collapses on his leg. His employer provided Accident insurance policy paid him $15,000 in a lump sum. b. Jay received $12,000 of disability income during the year from his employer-financed disability plan c. Jay received $8,000 of disability income during the year from a self-purchased disability policy d. Jay received a medical reimbursement of $11,000 during the year for medical expenses incurred under his employer-provided health plan 52. All of the following items of interest income are excluded from gross income EXCEPT: a. Interest on New York City School Bonds b. Interest of PA State Revenue Bonds (Highway financing) c. Interest on U.S. Treasury Notes d. Interest on City of Philadelphia Airport bonds 33. Joyce and Alan are married and file a joint tax return. Their adjusted gross income for the current year in 532.000. In addition, they received $3,000 of a tax-exempt municipal band interest and Social Security benefits of $10,000. How much of the Social Security benefits are included in gross income for the current year? a. SO b. $5,000 c. $4,000 d. $2,500 54. John is 66 and single. During the current year, he received Social Security benefits of $10,500. In addition, his adjusted gross income is $24,000. How much of the Social Security benefits are included in John's gross income for the current year? AbI-$24,000 a. SO 0 b. $4,250 Provisional UML no $2,125 d. $7,225 247000 +5,250-$29,250 41250/2 - 3,125 55. Under IRC Section 86, a portion of Social Security benefits is taxable if adjusted gross income exceeds a certain base amount. The base amount for "married filing separately" is: a. $0 b. $32,000 c. $25,000 d. $44,000 56. Which of the following items are included under the term "Social Security Benefits"? Retirement Benefits received under Social Security II. Tier-One Railroad Retirement Benefits a. I only b. II only c. Both I and II d. Neither I nor II 57. Mr. Lotito filed a lawsuit to recover damages he received in an automobile accident. As part of the settlement, he received damages of $250,000 for personal injuries sustained and $300,000 of punitive damages. The amount included in gross income is: a. $0 b. $300,000 c. $250,000 d. $550,000 32. Jim and Joan are married and both are age 70. They have adjusted gross income of $42,000 and social security benefits of $6,000. The amount of the social security benefits included in income is a. So c. $3,850 b. $2,000 d. $6,000 33. For the current tax year, Barry and Lena have AGI of $22,000 and $10,000 in social security benefits. Determine the taxable amount of social security. a. So c. $8,500 b. $5,000 d. $10,000 34. Grady paid $50,000 for an annuity. Monthly payments of $400 were expected for 20 years. In the first year, he received $3,600. How much of the $3,600 was included in his income? a. $2,000 c. SO b. $3,600 d. $1,725 35. Income received from all sources, except income that is specifically tax exempt by the Internal Revenue Code is called... a. Net income c. Bequests b. Income tax d. Gross income 36. Which of the following statements regarding the "kiddie tax" is correct? a. The kiddie tax only applies if the dependent child is 14 years of age or older by year end. b. Under the kiddie tax, the child's net unearned income is taxed at trust and estate tax rate levels. c. The kiddie tax applies only to income generated by an asset received from the child's parents. d. Only unearned income from assets transferred to the child during the current and prior 5 year period is subject to the kiddie tax. 37. Which of the following sources of income is tax exempt? a. Salaries c. Rents b. Gifts d. Dividends 38. Maggie is 65 and is owner and autant under an annuity contract the begins this year, making annuity payments of $9.000 per year for lite with 10 years certain. If Maggie's investment in the contract she has owned for 9 years is $100,000, her life expectancy under the regulations 15 20 years, and the actuarial value of the 10 year guarantee is $6,000. (i.e., refund feature) what is the amount of the annuity payment that could be excluded from Maggie's gross income each year? a. $4,504 c. $5,000 b. $4,700 d, $5,172 39. J is injured and receives $3,000 of income from a disability policy. J's employer paid 75% of the policy premiums and J paid the remainder. In addition, J's 557x200 employer has paid all the premiums on a health policy which paid J's doctor bills of $1,000. How much of the benefits must J include in income? a. So $2,250 b. $4,000 d. $750 40. Edith Cook, age 35, redeemed qualified U.S. Savings Bond during the year to pay the $5,000 tuition cost associated with completing her college education at the local University. She received $10,000 from the bonds, of which $3,000 was interest. What amount of interest income is taxable to Edith? a. $1,000 c. $5,000 b. $3,000 d. $1,500 41. Mr. Wright, an electrician, was injured in an accident during the course of his employment. As a result of the injuries sustained, he received the following payments during the year: Damages for personal injuries...........$8,000 Workmen's compensation...............$3,000 Reimbursement from an employer sponsored accident and health plan......$1,000 The amount to be included in Mr. Wright's gross income should be a. $0 c. $4,000 b. $1,000 d. $9,000 42. Katie was injured in an automobile accident while traveling to work. Her physician advised her to undergo a comprehensive rehabilitation program for the injuries sustained in the accident. The ensuing lawsuit resulted in Katie receiving the following amounts in settlement: Compensation for lost wages $40,000 Personal Physical Injuries Damages $75,000 Punitive Damages $40,000 How much of Katie's settlement is included in gross income? a. $80,000 b. $40,000 c. $75,000 d. $115,000 TRUE-FALSE: Circle Tor F to indicate your answer. TF 43. When taxable bonds are sold between interest dates, both seller and buyer disregard the accrued interest in determining the selling price and cost. T F 44. Joan and Ted were previously married to each other. Now Divorced, they share the same condominium. Ted pays Joan $400 monthly. The monthly payment is alimony for tax purposes. MULTIPLE CHOICE: Fill in the blank with your selection 45. Jim and Rhonda are divorced. Rhonda received payments characterized as alimony as follows: year one - $36,000; year two - $18,000; year three - $3,000. How much of the second year payment must Jim recapture as non-alimony? a. $20,000 c. $18,000 b. $0 d. $9,000 46. H and W divorce in 2018. As a result, H must pay alimony of $25,000 per year and relinquish the house and car valued at a total of $75,000 and which cost $70,000 as a property settlement. The result of these transactions to H is a first-year deduction of: a. $100,000 c. $75,000 b. $95,000 d. $25,000 47. The following items were received by an individu Laxpuyer as court awards and damages. All of the following are included in eross income EXCEPT: a. Compensation for lost wages b. Compensatory damages for personal physical injury c. A damage award for a breach of contract d. Interest income on a damage award for a breach of contract 48. Maria is age 24. She has interest income of $3,000. How much of Maria's income can be claimed on her parents' return? a, so c. $2,000 b. $1,000 d. $3,000 49. The price at which property would change hands in an arm's length transaction is called... a. Fair market value c. Carrying value b. Sale price d. Book value 50. The standard deduction for a married taxpayer who files a separate return if her/his partner (spouse) itemizes her/his deductions is: a. $0 b. Half of the standard deduction for both c. One third of the standard deduction for both d. $24,000 51. All of the following situations concerning the income tax treatment of an employer provided accident and health plan represent excludable income to an employee EXCEPT: a Jay loses a limb when a platform collapses on his leg. His employer provided Accident insurance policy paid him $15,000 in a lump sum. b. Jay received $12,000 of disability income during the year from his employer-financed disability plan c. Jay received $8,000 of disability income during the year from a self-purchased disability policy d. Jay received a medical reimbursement of $11,000 during the year for medical expenses incurred under his employer-provided health plan 52. All of the following items of interest income are excluded from gross income EXCEPT: a. Interest on New York City School Bonds b. Interest of PA State Revenue Bonds (Highway financing) c. Interest on U.S. Treasury Notes d. Interest on City of Philadelphia Airport bonds 33. Joyce and Alan are married and file a joint tax return. Their adjusted gross income for the current year in 532.000. In addition, they received $3,000 of a tax-exempt municipal band interest and Social Security benefits of $10,000. How much of the Social Security benefits are included in gross income for the current year? a. SO b. $5,000 c. $4,000 d. $2,500 54. John is 66 and single. During the current year, he received Social Security benefits of $10,500. In addition, his adjusted gross income is $24,000. How much of the Social Security benefits are included in John's gross income for the current year? AbI-$24,000 a. SO 0 b. $4,250 Provisional UML no $2,125 d. $7,225 247000 +5,250-$29,250 41250/2 - 3,125 55. Under IRC Section 86, a portion of Social Security benefits is taxable if adjusted gross income exceeds a certain base amount. The base amount for "married filing separately" is: a. $0 b. $32,000 c. $25,000 d. $44,000 56. Which of the following items are included under the term "Social Security Benefits"? Retirement Benefits received under Social Security II. Tier-One Railroad Retirement Benefits a. I only b. II only c. Both I and II d. Neither I nor II 57. Mr. Lotito filed a lawsuit to recover damages he received in an automobile accident. As part of the settlement, he received damages of $250,000 for personal injuries sustained and $300,000 of punitive damages. The amount included in gross income is: a. $0 b. $300,000 c. $250,000 d. $550,000