ACC341B Individual Taxation
2 points each
20 POINTS TOTAL
1.____ Ashley received a scholarship to be used as follows:
tuition $9,000; room and board
$6,000; and books and laboratory supplies $2,000.
Ashley is required to include only $6,000 in
her gross income.
2.____ Sam was unemployed for the first two months of 2010. During that time, he received
$4,000 of state unemployment benefits.
He worked for the next six months and earned $14,000.
In September, he was injured on the job and collected $5,000 of workers’ compensation benefits.
Sam’s Federal gross income from the above is $18,000 ($4,000 + $14,000).
3.____ Sarah’s employer pays the hospitalization insurance premiums for a policy that covers all
employees and their family members. Sarah can exclude from her gross income the premiums
for herself and her family members.
4.____ Nicole’s employer pays her $150 per month towards the cost of parking near a railway
station where Nicole catches the train to work. The employer also pays the cost of the rail pass,
$75 per month. Nicole can exclude both of these payments from her gross income.
A taxpayer who claims the standard deduction can also deduct expenses that are
classified as deductions
Expenses incurred in a trade or business are deductible
All employment related expenses are classified as deductions
A loss on the sale of a personal use asset cannot be deducted.
A bribe paid to a domestic (U.S.) official is
deductible, but it may be possible to
deduct a bribe paid to a foreign official.
Fines and penalties paid for violations of the law (e.g., illegal dumping of hazardous
waste) are deductible only if they relate to a trade or business.
3 points each
36 points total
Jena is a full-time student at State University and is claimed by her parents as a
dependent. Her only source of income is a $10,000 scholarship ($1,000 for books, $4,000 tuition,
$500 student activity fee, and $4,500 room and board). Jena’s gross income for the year is: