None of the above.
Jay is collecting under an annuity contract and the cost must be allocated among the payments
received on the basis of the cost/expected return, until the total cost has been recovered. Thus, for
each annuity payment received for the 180-month period, $200 [$36,000/($1,200
is excluded from gross income and $1,000 is included in gross income. Any payments
received after the 180-month period are included in his gross income.
Gordon, an employee, is provided group term life insurance coverage equal to twice his annual
salary of $125,000 per year.
According to the IRS Uniform Premium Table (based on Gordon’s
age), the amount is $12 per year for $1,000 of protection. The cost of an individual policy would
be $15 per year for $1,000 of protection. Since Gordon paid nothing towards the cost of the
$250,000 protection, Gordon must include in his 2012 gross income which of the following
Debbie is age 67 and unmarried and her only sources of income are $200,000 in taxable interest
and $20,000 of Social Security benefits. Debbie’s adjusted gross income for the year is:
Margaret owns land that appreciates at the rate of 10% each year. Ralph owns a zero coupon (i.e.,
all of the interest is paid at maturity but is taxed annually) corporate bond with a yield to
maturity of 10%. At the end of 10 years, the bond will mature and the land will be sold. At the
end of the 10 years,