1. Taxpayer (T), a cash basis individual taxpayer, lent money to each of his two daughters (D1 and D2) on January 1 of the current year. T lent $50,000 to D1 and $110,000 to D2. T did not charge any interest on the loans. D1 was 19 years old and used the $50,000 to open a brokerage account which invested in stocks. D1 had $300 of net investment income during the year. D 2 was 26 years old and used the loan to renovate her personal house. D2 had no investment income during the year. The applicable federal rate AFR is a 5% annual rate. The loans were outstanding for the entire year. What amount of income, if any, will T include on Ts individual income tax return as a result of the loan to

D1______________________ D2 ____________________

2. Taxpayer (T) a 59 year-old calendar year individual taxpayer purchased an annuity from an insurance company for $100,000 in 2019. The terms of the annuity were that the company would pay T $5,000 a year to T for the rest of Ts life. How much income will T include in Ts personal income tax return as a result of receiving the $5,000 payment

in 2020? _____________

In 2050? ______________

3. In 2019, Taxpayer (T) is a single, 65 year-old individual who is a U.S. citizen. T turned 65 in 2019. T receives $18,000 of social security income in 2019 (the first year T received Social Security Benefits). Also, T received $6,000 of interest income from a municipal bond in both 2018 and 2019. On June 1, 2018, T took a job with a multi-national corporation which paid T $5,000 per month. As a condition of the job, T is required to work overseas, in the country of Austria, and T did in fact work in Austria for 214 days (From June 1 December 31) in 2018. T is offered to continue to work (still in Austria and still for $5,000 per month) for seven additional months (from January 1 until the end of July, which is 211 days) in 2019, at which point Ts position would terminate. T is trying to decide whether T wants to continue to work for seven months in 2019 or quit on January 1. (These are Ts only transactions during 2018 and 2019).

1. What is Ts Gross Income in 2019 if T continues to work through July of 2019?

__________________________________

2. What is Ts Gross Income in 2019 if T does NOT continue to work in 2019?

__________________________________

3. Excluding the effects of the payroll tax and any credits, What is the economic benefit to T of continuing to work for 7 months in 2019 (meaning how much total extra money, after tax, will T have as a result of continuing to work in 2019)?

_____________________

4. As part of a tax relief plan to counter the economic effects of the Coronavirus, Congress has proposed sending $1,200 to certain individual taxpayers. If this provision were passed, would the recipients have to include the $1,200 in income? Answer yes or no and provide a BRIEF explanation. (brief means 1 or 2 sentences only).