40. Gina receives a $2,900 distribution from her educational savings account. She uses $ 1,500 for qualified higher education expenses and $1,400 on vacation. Immediately before the distribution, Ginas account balance is $5,000, $3,000 of which is her contributions. What is Ginas taxable income (after any exclusion) from the distribution?

a. $1,400

b. $560

c. $840

d. $0

e. Some other amount

41. Which of the following is correct for Qualified Tuition Programs (Section 529 plans)?

a. Contributions are deductible, and qualified educational expense distributions are tax-free.

b. Contributions are not deductible, and qualified educational expense distributions are tax-free.

c. Contributions are deductible, and qualified educational expense distributions are taxable.

d. Contributions are not deductible, and qualified educational expense distributions are taxable.

42. In 2022, Amy receives $8,000 (of which $3,000 is earnings) from a qualified tuition program. She uses the funds for tuition and other qualified higher education expenses. What amount is taxable to Amy?

a. $0

b. $8,000

c. $3,000

d. $11,000

43. For married taxpayers filing a joint return in 2022, at what AGI level does the phase-out limit for contributions to Section 529 plans start?

a. $110,000

b. $190,000

c. $220,000

d. There is no phase-out limit on Section 529 plan contributions

44. Which of the following is true with respect to education incentives?

a. The contributions to qualified tuition programs (Section 529 plans) are deductible.

b. The contributions to educational savings accounts (Coverdell ESA) are deductible.

c. Tuition paid by a taxpayer earning $300,000 of income is deductible.

d. Married taxpayers have no income limit to contribute to a qualified tuition program (Section 529 plan).

45. During 2022, Carl (a single taxpayer) has a salary of $91,500 and an interest income of $11,000.Calculate the maximum contribution Carl is allowed for an educational savings account(Coverdell)

.a. $0

b. $400

c. $1,000

d. $2,000

e. Some other amount

46. Alicia loses her job part way through 2022. Her employer pays her wages of $ 15,450 up through her termination date and date unemployment compensation from the state until she got a new job, for which she was paid. After that, she received $1,600 of unemployment compensation from the state until she got a new job, for which she was paid wages of $ 1,400 through year-end. Based on this information, Alicias gross income for 2022 is:

a. $15,450

b. $16,850

c. $17,050

d. $18,450

e. $21,850

47. For 2021, the maximum percentage of Social Security benefits that could be included in a taxpayers gross income is:

a. 0%

b. 25%

c. 50%

d. 75%

e. 85%

48. Generally, when calculating the taxable portion of Social Security benefits, modified adjusted gross income (MAGI) is adjusted gross income (without Social Security benefits):

a. Plus tax-exempt interest

b. Less personal and dependency exemptions

c. Less itemized deductions

d. Less tax-exempt interest plus any foreign income exclusion

e. Less tax-exempt interest income

49. Dana and Larry are married and live in Texas. Dana earns a salary of $45,000, and Larry has $25,000 of rental income from his separate property. If Dana and Larry file separate tax returns, what amount of income must Larry report?

a. $0

b. $22,500

c. $25,000

d. $47,500

e. None of the above

50. Which of the following conditions need not be satisfied in order for a married tax-payer residing in a community property state to be taxed only on his or her separate salary?

a. The husband and wife must live apart for the entire year.

b. A minor child must be living with the spouse.

c. The husband and wife must not file a joint income tax return.

d. The husband and wife must not transfer earned income between themselves.

e. All of the above must be satisfied.

51. Jack borrows $13,000 from Sawyer Savings and Loan and uses the proceeds to acquire a used car. When the loan balance is $12,000, Jack loses his job and is unable to make payments for three months. When Jack gets a new job, the bank agrees to forgive the missed principal payments and reduces his loan to $11,500. Jack remains solvent even when unemployed. How much cancellation of debt income does Jack have?

a. $0

b. $500

c. $1,500

d. $2,000

52. Kate acquired a principal residence in 2017 for $200,000, secured by a $180,000 mortgage. In 2022, Kate missed work for three months. Her employer stopped paying her after ten days. In 2022, when the mortgage balance is $170,000, Kate and the bank re-vise her terms and lower the loan balance to $150,000. The market value of the home remains above $200,000. How much cancellation of debt income will Kate recognize?

a. $0

b. $20,000

c. $10,000

d. $150,000

e. $170,000

53. Mike, a single taxpayer, has $10,000 of student loans forgiven in 2022 under a federal student loan forgiveness program. His total student loan balance was $34,000. His 2022 AGI is $55,000. How much cancellation of debt income will Mike need to recognize in 2022?

a. $0

b. $10,000

c. $5,000

d. $24,000