Need accounting help with a Federal income tax – true or false questions

3

Z was awarded $200 by a local charity for his commitment to the community. Z did not have to apply to receive the award and he does not have any commitment of services in the future. He used the $200 to buy school supplies for his children. The $200 is not included in his income.

 True

 False

Unemployment compensation is generally included in income.

 True

 False

N’s friend loaned her $5,000 to attend college. Upon N’s graduation her friend told her that she was proud of her and did not need to repay the loan. N has no income from this forgiveness.

 True

 False

The maximum amount of one’s social security benefits that must ever be included in income is 50%.

 True

 False

F receives a gift of stock from her uncle with a value of $1,000 and a basis to uncle of $1,200. F’s gain basis in the stock is $1,200.

 True

 False

X has worked for her employer for 12 years. Her employer gives her a gift of $400 at the company’s holiday party in December. X does not have to include this in her taxable income since this was a gift.

 True

 False

P’s husband dies this year and she receives $50,000 as beneficiary of his life insurance policy. P must include the $50,000 in her taxable income.

 True

 False

B receives a $20,000 scholarship that is sufficient to cover his tuition, fees, and $4,000 of his room and board. B must include $4,000 of the scholarship in his taxable income.

 True

 False

J wins $150,000 on a popular TV game show. She does not have to include her winnings in her taxable income.

 True

 False

Income in respect of a decedent is income that was earned before the individual died but had not been received as of the date of death.

 True

 False

M paid $100,000 for an annuity 10 years ago and began receiving payments in the current tax year. This year annuity payments received totaled $12,000. M will not include the entire $12,000 in income this year.

 True

 False

Punitive damages are always included in taxable income.

 True

 False

T’s employer provides a disability policy for all of its employees. T was injured this year and received disability payments of $5,000. These amounts are excluded from T’s income.

 True

 False

Worker’s compensation payments received for being injured on the job are excluded from income.

 True

 False

L is required to pay his ex-wife $1,000 per month for 10 years, with payments terminating if she should die before the period expires. L can deduct these payments as itemized deductions on his tax return.

 True

 False

Stock dividends are not taxable as long as no more than 10% of shareholders do not opt to receive cash in lieu of the stock.

 True

 False

Z sells municipal bonds and realizes a gain of $2,300. This gain must be included in Z’s taxable income.

 True

 False

B receives payment for $50,000 of merchandise in March but is also notified by the customer in May that the merchandise was defective and the customer is suing for repayment of $35,000. For the current year B must include only $15,000 in income.

 True

 False

T is offered payment for a $5,000 invoice on December 28, Year 1, but declines the payment and asks the client to mail it so that she does not receive it until Year 2. T must include the $5,000 in income in Year 1.

 True

 False

For income to be included in taxable income there must be a specific law that provides for the inclusion.

 True

 False

 
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