41. Carruther's Heating & Air Conditioning Corporation, a cash-basis taxpayer, sells service contracts on the furnaces and air conditioners it sells. At the beginning of January of this year, Carruther's Heating & Air Conditioning Corporation sold contracts with service to begin immediately:

One for three months

$200

One for 20 months

800

One for 48 months

4,000

The amount of income Carruther's Heating & Air Conditioning Corporation must report for this year is

A) $200.

B) $1,000.

C) $1,680.

D) $5,000.

42. Yvonne redeemed EE bonds which qualify for the educational exclusion. The redemption consisted of $14,000 principal and $6,000 interest. The net qualifying educational expenses are $10,000. Her AGI is below the threshold for phase-out of the exclusion. The taxable interest is

A) $0.

B) $2,400.

C) $3,000.

D) $6,000.

43. Chen, who is single, paid educational expenses of $16,000 in 2021. He redeemed Series EE bonds and received principal of $8,000 and interest of $3,000. Chen has other adjusted gross income of $87,200. With respect to the $3,000 of bond interest, Chen must include in taxable income

A) $0.

B) $1,400.

C) $1,600.

D) $3,000.

44. Michelle purchased 2,000 shares of Stone Corporation for $13,200. This year, Stone declared a 10% nontaxable stock dividend, and Michelle received 200 shares. After the dividend Michelle's per share basis will be

A) $6.00.

B) $6.57.

C) $6.60.

D) $7.26.

45. A couple will be getting divorced in 2021, resulting in the payment of alimony. Alimony paid in 2021 will be

A) deductible by both the payor and the payee.

B) deductible by the payor and included in income by the payee.

C) included in income by the payor and deducted by the payee.

D) an item which does not affect the payor's or the payee's tax reporting.

46. Ivania purchased an annuity for $20,000 that will pay her $500 per month for ten years. What amount should Ivania include in her income each year?

A) $0

B) $2,000

C) $4,000

D) $6,000

47. Bahri, age 57, purchases an annuity for $33,600. Bahri will receive $400 per month for the rest of his life. The expected return multiple is 20.0. At age 88, the amount that Bahri may exclude from income is

A) $0.

B) $1,680.

C) $3,120.

D) $4,800.

48. Mr. Perez, age 70, is thinking about going back to work part-time. He knows that the wages may affect the taxability of his Social Security benefits. What is the maximum percentage of Social Security benefits that could become taxable?

A) 0%

B) 50%

C) 85%

D) 100%

49. In addition to Social Security benefits of $8,000, Mr. and Mrs. Goldberg have adjusted gross income of $32,000 and tax-exempt interest of $1,000. They will file a joint return. The taxable portion of their Social Security benefits will be

A) $0.

B) $2,500.

C) $4,000.

D) $8,000.

50. Aleksander is a single taxpayer with a taxable pension of $24,000, tax-exempt interest of $8,000, and Social Security benefits of $10,000. What is the amount of his taxable Social Security benefits?

A) $5,000

B) $8,500

C) $7,050

D) $10,000