test 2 bank - Starting in 2011, Mr. West must pay his...

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Starting in 2011, Mr. West must pay his former spouse $20,000 annually under a divorce decree in the following amounts: -$1,000 a month for mortgage payments (including principal and interest) on a jointly owned home until she dies -$200 a month for tuition fees paid to a private school until their son attains the age of 18 or leaves the school prior to age 18 -$5,000 a year cash payment to former Mrs. West until she dies -In addition to the above amounts, the former Mrs. West also received in 2011 a lump- sum amount of $150,000 from the sale of their other marital assets. Assume the parties did not file a joint return and were not members of the same household. Also, assume that there were no written statements between the parties as to how the amounts should be treated. What is the amount of Mr. West's 2011 alimony deductions? Choose one answer. a. $20,000 b. $155,000 c. $17,600 d. $11,000 $11,000. The $5,000 annual payment and the $500 per month towards the mortgage on the jointly owned home are treated as alimony. Correct Marks for this submission: 2/2. Question 2 Marks: 2 An amount called a security deposit which is to be used as a final payment of rent should not be included in rental income in the year received, but should be included in income in the year the lease expires. Answer: True False If it is prepaid rent it must be included in the year received. * This question has been adapted from the IRS Examinations. Correct Marks for this submission: 2/2. Question 3 Marks: 2 Eric agrees to paint Naomi's porch if Naomi pays $200 to Eric's elderly mother. The $200 is included in Eric's gross income.
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True False Correct Marks for this submission: 2/2. Question 4 Marks: 2 Which of the following is true regarding a nonbusiness bad debt? Choose one answer. a. It is deductible as a short-term capital loss. b. It is not deductible. c. It is deductible only if you itemize. d. It is deductible as a long-term capital loss. The non-business bad debt is deductible as a short-term capital loss. Correct Marks for this submission: 2/2. Question 5 Marks: 2 All of the following distributions of stock dividends are taxable except: Choose one answer. a. The shareholders have the choice to receive cash or othe b. The distribution of common stock is made on a prorated b c. The distribution gives cash or other property to some sha interest in the corporation's assets or earnings and profits to d. The distribution gives preferred stock to some common s common stock shareholders. Distribution of stock on a prorated basis to all stockholders does not generate taxable income because it does not affect the owners' proportional shares. * This question has been adapted from the IRS Examinations. Incorrect
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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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test 2 bank - Starting in 2011, Mr. West must pay his...

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