57%(37)21 out of 37 people found this document helpful
This preview shows page 32 - 34 out of 38 pages.
17. Abigail received $6,000 from her employer as reimbursement for her expenditures on tuition, fees, and books while attending State University. Abigail is working toward a graduate degree in business administration. Must Abigail recognize the $6,000 as income?18. If an employee is covered by a group-term life insurance plan that pays the entire premium of the policy, must the employee include the premium coverage in income if her salary is over $50,000 per year?19. In January 2013, Leon McLeod received a gift of a beach cottage valued at $250,000 from his great-uncle who owned a number of such buildings. The cottage was rented each year to college students who occupied it during the school year. The annual net rental income received is $20,000 per year. The 2013 tax return of McLeod would include what elements of this transaction?20. The Hightown Council refused to increase the town budget. Robert Read was laid off from work on August 4, 2013. Earlier in the year he had been temporarily disabled from a job-related injury and had received disability benefits. At year-end Robert Read and his wife have the following sources of income:Disability income$ 2,500Unemployment compensation5,000Salary—January 1—August 4, 201310,000Wife’s salary9,000Supplemental unemployment compensation—employer provided3,000What amount of Read’s family income was includible in gross income?
21. In 2013, Windsor Knott, an employee of the Victoria Tie Company, was seriously injured in the factory stockroom. He was hospitalized for 30 days and lost partial use of his left hand. During his hospitalization and recovery period, he received the following:Workers’ compensation$ 9,000Medical expenses reimbursement10,000Disability insurance benefits (insurance paid by taxpayer)4,000Accident and health insurance benefits (company policy benefits based on the degree of permanent injury)9,500Determine Knott’s tax liability with regard to these payments. If the medical expenses had been deducted from Knott’s 2013 tax return and reimbursement was received in 2014, how would the reimbursement be reflected in the 2014 return?22. David and Renee Kimberly, ages 75 and 65, respectively, have the following sources of income:Private pension receipts$18,000Social Security12,000Interest on bank deposits2,500Dividends from domestic corporations2,000Interest on tax-exempt securities700Their itemized deductions total $11,000. Compute their taxable income.23. Hi Tech Accounting Services changed its fringe benefit package as of the first of this year. Employees are now eligible to receive group term life insurance equal to twice their annual salary up to $100,000. Harry's salary is $90,000 per year. Prior to this year employees received group term life insurance up to $50,000. Harry is 52 years of age and has adjusted gross income of $78,000. Does Harry suffer any tax consequences because of this change in policy?