QMB_COMBINED-1

# Bernice decides to take the 50000 in a lump sum

• Notes
• 119
• 95% (21) 20 out of 21 people found this document helpful

This preview shows page 100 - 102 out of 119 pages.

she will earn only five-percent interest per year, receiving \$10,500 per year for five years. Bernice decides to take the \$50,000 in a lump-sum payment and invest the funds herself. Of the \$50,000 received: ** a. All \$50,000 is tax-free. b. All \$50,000 is taxable income. c. \$500 is interest income for each year. d. The first \$25,000 is taxable. Question 13 (5 points) Kendrick is injured in an accident while working at his job. He received \$1,500 in worker's compensation benefits for 5 weeks of lost work. How much should Kendrick report as gross income from the receipt of these benefits? ** a. \$ - 0 - b. \$ 300 c. \$ 750 d. \$ 900 e. \$1,500 Question 14 (5 points) Ward and June are in the 28% tax bracket. Included in their assets is a Dell Computer Corporation bond with a face value of \$10,000. The bond pays \$1,000 a year in interest. Ward and June gift the bond to their son, Wally (age 18), on January 1, 2006. Wally is in the 15% tax bracket. The 2006 net tax savings for the family unit of Ward, June and Wally related to the transfer of the bond is a. \$ -0- ** b. \$130 c. \$150 d. \$280 Question 15 (5 points) Bart's spouse, Carla, dies during the current year. Carla's life insurance policy names Bart the sole beneficiary of the \$2 million proceeds. Bart invests the \$2 million in a bank certificate of deposit (CD). For the current year, Bart earns \$98,000 interest from the CD. What are the tax effects of these events for Bart? I-The \$2 million is excluded from gross income. II-Bart has no taxable income from these transactions. ** a. Only I is correct. b. Only II is correct. c. Both are correct. d. Neither is correct. Question 16 (5 points)

Subscribe to view the full document.

Hilda is on a "full ride" tennis scholarship at Western University. Her \$12,500 scholarship covers tuition and books (\$7,000) and room and board (\$5,500). Hilda's gross income is ** Question 17 (5 points) Ally served as chairperson of the local school board. Upon completion of her term in office, the organization awards her a silver-serving tray in recognition of her outstanding service to the organization. The value of the tray is \$200. What are the tax effects of the award? I-This is not an employer/employee relationship; exceptions for awards do not apply. II-The value of the tray is included in gross income because of services rendered. III-The tray is a gift because it is from a detached and disinterested generosity. ** Question 18 (5 points) Natalie is in the 33% marginal tax bracket. Because of her high tax rate, Natalie would like to reinvest a \$10,000, 6%, certificate of deposit in a tax-exempt bond. What is the minimum rate of interest Natalie would have to receive to make the tax exempt-bond a more profitable investment? ** a. 4.0% b. 6.0% c. 8.0% d. 9.0% Question 19 (5 points) Ally served as chairperson of the local school board. Upon completion of her term in office, the employees in the school district offices take up a collection and purchase her a silver sterling tray in recognition of her outstanding service to the organization. The value of the tray is \$200. What are the tax effects of the award?
• Fall '08
• ZANAKIS

{[ snackBarMessage ]}

###### "Before using Course Hero my grade was at 78%. By the end of the semester my grade was at 90%. I could not have done it without all the class material I found."
— Christopher R., University of Rhode Island '15, Course Hero Intern

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern