tax quiz 5 - Don Driller, who is 56 years old, is provided...

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Unformatted text preview: Don Driller, who is 56 years old, is provided with $120,000 of group-term life insurance by his employer. Based on the IRS uniform premium cost table, the total annual cost of a policy of this type is $9.00 per $1,000 of coverage. Don's required contribution to the cost of the policy is $2.00 per $1,000 of coverage per year. Don was covered for the full 12 months of 2011. How much of the cost must Don include in his income for 2011? Choose one answer. a. $0 b. $390 c. $630 d. $840 Don Driller must include in his gross income premiums on $40,000 of group term life insurance. $70,000 x $9/$1,000 $630 Less: $120,000 x $2/$1,000 240 Amount Don must include in gross income $390 * This question has been adapted from the AICPA Examinations. Correct Marks for this submission: 1/1. Question 2 Marks: 1 An annuity is a contract that pays a fixed income at set regular intervals for a specific period of time. Answer: True False * This question has been adapted from the IRS Examinations. Correct Marks for this submission: 1/1. Question 3 Marks: 1 All of the following income items are includible in an employee's gross income except: Choose one answer. a. Severance pay for cancellation of employment b. Vacation allowance c. Payments from employer while sick or injured d. Medical insurance premium paid by employer for employee e. Moving expense reimbursement Section 106 specifically excludes from income premiums paid by an employer for medical insurance. * This question has been adapted from the IRS Examinations. Correct Marks for this submission: 1/1. Question 4 Marks: 1 Marnie purchased a bond on August 15, 2011 for $2,100. $200 of the purchase price represented accrued interest. She received $210 in interest income on the bond on December 1, 2011. What is the proper treatment of the $210 interest income for federal income tax purposes? Choose one answer. a. $200 return of capital, the $10 can be curren the bond is cashed. b. Marnie can elect to include the $210 as inte she cashes the bond. c. $210 taxable as interest income. d. Report the total payment as taxable interest income. All income should be reported as taxable interest, then the taxpayer excludes from $200 the amount of accrued interest at the time of purchase. * This question has been adapted from the IRS Examinations. Correct Marks for this submission: 1/1. Question 5 Marks: 1 Ben is a waiter at a small restaurant. On working days, Ben is required to have lunch on the premises; however, the meal is furnished free-of-charge by Ben's employer. Additionally, Ben is permitted to have lunch free-of-charge on his day off. Under these circumstances, only the value of the lunches eaten by Ben on his day off is includible in Ben's taxable income....
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This note was uploaded on 10/19/2011 for the course INCOME TAX 4404 taught by Professor Bulie during the Spring '11 term at University of Minnesota Duluth.

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tax quiz 5 - Don Driller, who is 56 years old, is provided...

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