Employees may exclude from gross income for payments received from their employer for educational expenses? A Zero. B. $1,000 C. $5.250 D. $12,200 for a single taxpayer. 7. Erika failed to report $19,000 of income. She did report income of $75,000 on her tax return. Assume Erika did not commit fraud. When does the statute of limitations expire for this under-reported income? A Never B. One year C. Three years D. Six years 8. A taxpayer is taxed on compensation earned from an employer. However, certain employer provided fringe benefits are excluded from gross income. Which of the following is excluded from gross income? A Commissions B. Group-term life insurance premiums C. Director's fees D. Bonuses 9. The hybrid method of accounting is permissible for certain taxpayers. In what situation is this method most often encountered? A. Foreign-based companies that are not subject to U.S. tax rules. B. Large, publicly traded corporations. C. "S' Corporations. D. In small businesses that maintain inventory. 10. A taxpayer may defer advance payments for inventory if A The taxpayer's method of accounting for the sale is the same for tax and financial accounting purposes. B. The taxpayer's method of accounting results in higher taxable income for tax purposes as compared to financial accounting purposes. C. Only if the taxpayer files Form 4585 and receives permission from the IRS. D. Only if inventory is not a material factor in calculating taxable income of the taxpayer. 11. In a recent lecture, you were introduced to a Star Trek episode. What is the parallel (or similarity) between the Star Trek episode and capital assets for tax purposes? A The Star Trek episode discussed how taxes affect the foreign income exclusion. B. Like the Star Trek episode, the tax code merely defines what is a capital asset. C. Like the Star Trek episode, the tax code merely defines what is NOT a capital asset. D. The Star Trek episode demonstrated how capital assets are defined