9.

Ivanka and Jared are divorced in the current year. As part of the divorce settlement, Ivanka transfers a plot of land in Long Island, NY to Jared. Ivanka's basis in the property was $20,000 and the market value of the property was $250,000 when transferred. Jared holds the property through the end of the year and in hopes of building a residence on it. How much income do Ivanka and Jared recognize in the current year?

a.$230,000 for Ivanka and $20,000 for Jared.

b.$0 for Ivanka and $20,000 for Jared.

c.$0 for both Ivanka and Jared.

d.$0 for Ivanka and $250,000 for Jared.

e.$230,000 for Ivanka and $0 for Jared.

11.

Huihana receives a watch for achieving 20 years of employment with her employer. The watch cost the employer $225 and has a market value of $250 on the date awarded. Huihana is in the highest tax bracket for single taxpayers. How much gross income will Huihana recognize on the receipt of the watch?

a.$250

b.$0

c.$50 or $59.50 including the net investment income tax

d.$200

e.$25

13.

Amara has an annuity and over time has recovered her entire investment but it continues to pay her $450 per month. Amara should recognize how much of each monthly payment as gross income?

a.Some amount between $0 and $450

b.Some amount greater than $450

c.$0

d.$450

15.

Harry's wife Lila passes away in January of the current year. Fortunately, Lila had a $1,000,000 life insurance policy. Harry elects to receive all $1,000,000 in the current year and spends $200,000 of it on a luxury around-the-world trip with his new girlfriend. Harrys gross income from the life insurance is:

a.$200,000

b.$0

c.$1,000,000

d.$800,000

17.

Gifts and Inheritances, Accident and Health Insurance, Meals and Lodging, (LO 2.7, 2.8, 2.9, 2.10)

Which of the following items would be includable in the gross income of the recipient?

a.Payments to a student for working at the student union food court.

b.Lodging provided to a worker on a remote oil rig.

c.Insurance payments for medical care of a dependent child.

d.Season tickets worth $2,000 given to a son by his father.

18.

Kelly receives a $40,000 scholarship to Ivy University. She uses $30,000 on tuition and books, $5,000 for a used car, and $5,000 for rent while at school. Kelly will recognize _______ gross income.

a.$5,000

b.$30,000

c.$40,000

d.$0

e.$10,000

19.

Malin is a married taxpayer and has three dependent children. Malin's employer offers health insurance for employees and Malin takes advantage of the benefit for her entire family (her spouse's employer also offers health insurance but they opt out). During the year, Malin paid $1,200 toward her family's health insurance premiums through payroll deductions while the employer paid the remaining $9,200. Malin's family visited health care professionals numerous times during the year and made total co-payments toward medical services of $280. Malin's daughter had knee surgery due to a soccer injury and the insurance company paid the hospital $6,700 directly and reimbursed Malin $400 for her out-of-pocket health care expenses related to the surgery. How much income should Malin recognize related to her health insurance?

a.$9,200

b.$8,000 ($9,200 $1,200)

c.$14,020 ($9,200 + $6,700 $1,200 $280 $400)

d.$0

e.None of these choices are correct.

20.

George works at the Springfield Nuclear Plant as a nuclear technician. The plant is located 15 miles from the town of Springfield. George likes to take his lunch at the plant's cafeteria because he is required to be available for nuclear emergencies during his shift. Unsurprisingly, there are no other eating establishments located near the plant. George estimates the value of the meals he was provided during the current year as $1,300. He estimates the cost for him to have prepared those lunches for himself as about $560. The cost of the meals to the power company was $470. How much income does George need to recognize from the meals?

a.$470

b.$1,300

c.$830 ($1,300 $470)

d.$560

24.

Which of the following will result in the recognition of gross income:

a.Jayden's employer purchases her commuting pass for the subway at a cost of $225 per month.

b.Gail's employer allows her to set aside $4,000 from her wages to cover the cost of daycare for Gail's four-year old daughter. Gail's daycare costs are $4,300 for the year.

c.Hannah purchases a new sofa from her employer, Sofas-R-Us, for $1,200. The cost of the sofa to the furniture store is $1,100 and the sofa normally sells for $1,700.

d.Havana is a lawyer. The law firm she works for pays for her subscription to Lawyer's Weekly, a trade magazine for attorneys.

25.

For 2017, the minimum percentage of Social Security benefits that could be included in a taxpayer's gross income is:

a.0%

b.75%

c.25%

d.85%

e.50%