Homework week 4

Income Tax Fundamentals 2011 (with H&R BLOCK At Home(TM) Tax Preparation Software CD-ROM)

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Gross Income and Exclusions 1. The definition of gross income in the tax law is: (c) All income from whatever source derived 2. Which of the following is not taxable for income tax purposes? (c) Child Support 3. All of the following items are taxable to the taxpayer receiving them, except: (b) Damages for physical personal injury 4. Which of the following types of income is tax free? (a) Welfare payments 5. Which of the following is included in gross income? (d) Hobby Income 6. Which of the following prizes or awards is taxable? (e) All of the above are taxable 7. A taxpayer retires this year and receives the first payment on an annuity that was purchased several years ago. The taxpayer’s investment in the annuity is $75,000, and the annuity pays $10,000 per year for the remainder of the taxpayer’s life. Based on the IRS mortality tables, the taxpayer is expected to live another 2 years. If the taxpayer receives $4,000 in annuity payments in the current year, the nontaxable portion calculated
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Unformatted text preview: using the general rule is: $75,000/ (10,000x2)=exclusion ratio is 15% 15%x4,000 received this year=$600 excluded $3,400 is taxable (C) $1,500 8. Which of the following would result in life insurance proceeds that are taxable to the recipient? (b) A life insurance policy transferred to a creditor in payment of a debt 9. Which of the following gifts would probably be held to be taxable to the person receiving the gift? (B) A trip to Mexico given to a purchasing agent by one of the company’s suppliers 10. Which of the following items would be includable in the gross income of the recipient? (C) Season tickets given by a salesperson to a customer 11. For 2010, the maximum percentage of Social Security benefits that must be included in a taxpayer’s gross income is: (a) 85% 12. Generally, modified adjusted gross income (MAGI) is adjusted gross income (without Social Security benefits): (e) Plus tax-exempt interest income...
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Homework week 4 - using the general rule is: $75,000/...

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