An employee of a nail salon is allowed a 20% discount on any nail services she purchases from the salon. In 2018, she purchased 24 manicures and 16 pedicures. The total cost would have been $1,400. The employee paid only $1,120 because she was an employee for all of 2018. The federal income tax treatment of the $280 discount is:

a. include gross income

b. deduct $280 from AGI if the standard deduction is not elected

c. exclude $280 from gross income

d. deduct $1,120 for AGI

e. deduct $280 for AGI

Mindy pays no sales tax when she purchases a chair for $835 from a store in New Hampshire while visiting there to see the lovely foliage. New Hampshire does not impose a sales tax. Mindy lives in New York, where sales and use tax are imposed at a rate of 8%, and returns there with the chair. Mindy must

a. include $835 in her gross income

b. pay use tax equal to $66.80 to New York

c. pay sales tax equal to $66.80 to New Hampshire

d. purchase deed tamps to bring the chair to New York

e. all of the above

Roger died and in his will he bequeathed all of his property to his daughter, Sara. The property was worth $200,000 at Rogers death. For federal income tax purposes, Sara should:

1. include $200,000 in her gross income
2. deduct $200,000 from AGI, subject to a 10% floor
3. include $187,000 in her gross income
4. exclude $200,000 from her gross income
5. deduct $200,000 for AGI

Once a month, Arthur called his mother long distance from his telephone at the office. His employer permits employees to make occasional personal calls and does not require employees to reimburse the cost of such calls. If Arthur paid for the calls last year, they would have cost $22. For federal income tax purposes Arthur should:

a. exclude $22 from gross income as part of the cafeteria plan

b. include $22 in gross income

c. deduct $22 from AGI

d. exclude $22 as a de minimus fringe

e. include $18 in gross income

Which of the following are deductions for AGI:

a. trade or business expenses

b. property taxes on a personal residence

c. charitable contributions

d. fines and penalties incurred in a trade or business

e. none of the above

Personal use property may be:

a. intangible

b. tangible

c. real property

d. personal property

e. all of the above

Carin, a widow, elected to receive the proceeds of a $100,000 life insurance policy on the life of her deceased husbands in 10 annual installments of $11,000 each. Her husband had paid premiums of $30,000 on the policy. Over the life of the installment payments, Carin must include in her gross income:

a. $0

b. $10,000

c. $70,000

d. $100,000

e. $60,000