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Chapter 5 Quiz 2

Chapter 5 Quiz 2 - Chapter 5 Quiz 2...

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Chapter 5 Quiz 2 Started: February 25, 2012 3:08 PM Questions: 10  1.COMPREHENSIVE VOLUME CHAPTER 5—GROSS INCOME: EXCLUSIONS Question MC #2 (Points: 2)  Cash received by an individual: 1. None of the above. 2. May be included in gross income although the payor  is not  legally obligated to make the payment. 3. Must always be included in gross income. 4. Is  not  included in gross income if it was not earned. 5. Is  not  taxable unless the payor is legally obligated to  make the payment. option # 2  Save Answer 2.COMPREHENSIVE VOLUME CHAPTER 5—GROSS INCOME: EXCLUSIONS Question MC #59 (Points: 2)  Gold Company was experiencing financial difficulties,  but was not bankrupt or insolvent. The National Bank,  which held a mortgage on other real estate owned by  Gold, reduced the principal from $110,000 to $85,000.  The bank had made the loan to Gold when it  purchased the real estate from Silver, Inc. Pink, Inc.,  the holder of a mortgage on Gold’s building, agreed to  accept $40,000 in full payment of the $55,000 due.  Pink had sold the building to Gold for $150,000 that  was to be paid in installments over 8 years. As a result  of the above, Gold must:
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1. None of the above. 2. Include $40,000 in gross income. 3. Include $15,000 in gross income and reduce its  basis in the building by $25,000. 4. Include $25,000 in gross income and reduce its  basis in its assets by $15,000. 5. Reduce the basis in its assets by $40,000. Save Answer 3.COMPREHENSIVE VOLUME CHAPTER 5—GROSS INCOME: EXCLUSIONS Question MC #26 (Points: 2)  The plant union is negotiating with the Eagle  Company, which is on the verge of bankruptcy. Eagle 
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