quiz 4 - PRACTICE QUIZ CHAPTER 4 1) Bette is beneficiary of...

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PRACTICE QUIZ – CHAPTER 4 1) Bette is beneficiary of a $80,000 insurance policy on her father's life. Upon his death, she may elect to receive the proceeds in five yearly installments of $17,500 or may take $80,000 lump sum. She elects to take the $80,000 lump sum payment. What are the tax consequences in year one? a. All $17,500 each year is taxable. b. $7,500 interest is taxable in the first year. c. There is no taxable income. d. $1,500 of the $17,500 payment is taxable each year. 2) Hope receives a $8,500 per year scholarship from State University. The university specifies that $5,500 is for tuition, books, supplies, and equipment, while $3,000 is for room and board. In addition, Hope works parttime at the campus library and earns $5,000 to cover other expenses. Hope’s gross income is a. $5,000. b. $8,000. c. $8,500. d. $13,500. 3) Liza's employer purchased a disability income policy from an insurance company on behalf of all of its employees. The employer paid for twothirds of the premiums, and the
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This note was uploaded on 02/25/2010 for the course ACCT 5330 taught by Professor Bob during the Spring '10 term at University of Arizona- Tucson.

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quiz 4 - PRACTICE QUIZ CHAPTER 4 1) Bette is beneficiary of...

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