7In return for a $5,000 payment, Creditor cancels Taxpayer's debt of $8,000. The cancellation is not a gift and Taxpayer is neither insolvent nor bankrupt. Which of the following statements is correct?

ACreditor has $8,000 taxable income.

BTaxpayer has $3,000 of taxable income. c Taxpayer has $5,000 of taxable income.

DNeither Creditor, nor Taxpayer has any taxable income from this transaction.

None of the above (all of the statements are false)

8Landlord rents a parcel of real estate to Tenant. During the term of the lease, Tenant locates a more suitable parcel and pays Landlord $10,000 in exchange for Landlord's agreement to terminate the lease. How should Landlord classify the $10,000 receipt for federal income tax purposes?

AAs advance rent to be capitalized and amortized over the remaining term of the original lease

BAs a security deposit to be converted to rent income at the end of the original lease term.

CAs a nontaxable receipt

DAs rental income in the year of the receipt None of the above

9.Taxpayer, single and age 46, reports adjusted gross income of $145,000 for 2019.

During 2019, Taxpayer redeems several Series EE U.S. savings bonds, receiving $18,000 of principal and $2,000 of interest income. Assuming that Taxpayer has $18,000 of qualifying higher education expenses, how much of the $2,000 of interest income may she exclude on her 2015 federal income tax return?

$ 200

1,800 c1,600 D2,000

None of the above

10.Taxpayer is employed by Corp. A. For tax year 2019, Taxpayer receives benefits as set out below.

Wages of $40,000

Group medical insurance premium coverage of $1,200

Office safety award, paid in cash, of $200

Christmas ham, worth $10

Outstanding work performance award, paid in cash, of $500

From the above listing, what total amount must Taxpayer include in gross income for the year?

$41,910

40,710 c40,700

41,900

None of the above

11.Taxpayer, a widow, elected to receive the proceeds of a $100,000 face value life insurance policy on the life of her deceased husband in ten annual installments of $13,600 each, payments to commence in 2019. How much, if any, of the $13,600 received in 2019 should Taxpayer recognize as income on her 2019 federal income tax return?

$ 3,600 13,600 c

10,000

None of the above

12.Albert was injured in an automobile accident caused by another driver. Albert's son, Patrick, was a passenger in the automobile, but was not physically injured. A court ordered the other driver's insurance company to pay Albert $10,000 to cover medical bills related to his injury, $4,000 to compensate him for emotional distress caused by his injuries, and $15,000 for punitive damages. The court also ordered the insurance company to pay $3,000 to Patrick to compensate him for emotional distress caused by witnessing his father's injuries. How much income, if any, will Albert recognize from the payments?

A$ 14,000

15,000 c29,000

18,000

None of the above

13During 2019, Albert redeems Series EE savings bonds for $6,000 - - consisting of $2,000 interest and $4,000 principal. Albert had net qualifying education expenses of $5,000 that year. Albert, a single individual, reports adjusted gross income

(without the savings bond interest) of $20,000. How much may Albert exclude on his 2019 federal income tax return?

$1,670

1,000 c2,000

330

ENone of the above

14. During 2019, Taxpayer was granted a divorce from his wife. The divorce decree stipulated that Taxpayer was required to pay both alimony and child support for a specified period of time. For 2019, Taxpayer reports data as listed below.

Salary income$50,000

Interest income (bank accounts) 2,000 Interest income (municipal bonds) 1,000 Alimony paid to former spouse by Taxpayer 3,600 Child support paid to former spouse by Taxpayer 4,800

What is the amount of Taxpayer's 2019 adjusted gross income?

$44,600

48,400 c49,400

52,000

None of the above

15 During the current year, Dan Davis, a flight attendant, received wages of $30,0000. The airline provided transportation on a standby basis, at no charge, from his home in Detroit to the airline's hub in Chicago. The fair market value of the commuting flights was $5,000. Also that year, Dan received reimbursements, under an accountable plan, of $10,000 for overnight travel, but only spent $6,000. The $4,000 excess was returned during the year. Dan became disabled in November of the year and received worker's compensation of $4,000. What amount must Dan include in gross income on his Form 1040?

$30,000

34,000

c35,000

37,000

None of the above

16.Taxpayer owns 200 shares of common stock of Corp. A with a combined basis of $120,000, Assume that the taxpayer receives a nontaxable stock dividend of 30 shares of Corp. A preferred stock. On the date of the dividend distribution, the market value of the common stock is $750 per share and the market value of the preferred stock is $1,000 per share. What will be the new basis (per share) of the common stock?

500 c1,000

D670

None of the above

17.All of the following are requirements for a payment to be classified as alimony

(under instruments executed after 1984, but before 2019) except that ...

APayments can be made in cash or property

Payments cannot represent a transfer of services c Payments are required to be pursuant to a divorce or separation agreement

DPayments are not required after death of the recipient spouse (or former spouse)

None of the above

18.Taxpayer, age 68, just purchased an annuity contract at a cost of $100,000. Assume that the annuity will pay Taxpayer $600 per month for life. How much of each $600 payment will Taxpayer exclude?

$ 600

130 c470

450

None of the above

19 Taxpayer received a $10,000 grant from Ajax College during 2019. Taxpayer was a candidate for a degree and was required to be a research assistant, for which Taxpayer was paid $3,000. The $10,000 grant breaks down as follows:

Tuition$4,500

Required books and supplies2,500

Research assistant compensation3,000

How much, if any, of the $10,000 scholarship grant must Taxpayer include in income for the year?

$10,000

5,500 c7,500

3,000

None of the above