Sphinx inc purchases a group term life insurance plan

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Question 4   (5 points) Sphinx, Inc., purchases a group-term life insurance plan for all its employees. Harold receives $250,000 of  insurance for the current year at a cost to the company of $3,500. The IRS Table of Premium values indicates that  premiums are $1.08 annually per $1,000 of protection. How much gross income does Harold have from the  purchase of the life insurance by Sphinx, Inc.?  Student response: Correct Response Student Response Answer Choices x a. $ 216 b. $ 270 c. $2,800 d. $3,500 e. $5,000 Question 5   (5 points) Mark graduated from business school in December 2005. To honor Mark, on January 3, 2006 his uncle gives him  two tickets to the Super Bowl. The uncle paid $200 for each ticket. Because he had to report to work at a brokerage  firm in Dallas, Texas, on January 15, 2006, he could not use the tickets. Therefore, he sells them for $1,000 each.  How much gross income must Mark recognize in 2006 because of these events?  Student response: Correct Response Student Response Answer Choices x Question 6   (5 points) The information that follows applies to the current year for Richard and Pam, a married couple. •Richard is employed as a shoe salesman; his compensation is $65,000. •Pam is employed as an interior designer; her compensation is $90,000. •Richard and Pam have total allowable itemized deductions of $15,000. •Richard and Pam have two dependent children. •Richard and Pam have other economic income as follows: - Interest on U.S. Treasury bonds $1,000.  - Interest on French government bonds $750. - Interest on City of Miami, Fla. bonds $1,200.
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- Pam won $500 from the state lottery - Richard's wealthy uncle dies and leaves him $10,000. - Pam sold Richard's baseball card collection for $3,000. Richard bought it in 1981 for $800. - Pam sells Richard's fishing boat for $2,000. Richard had purchased the boat 3 years ago for $2,500. Based on the above information, what is Richard and Pam 's taxable income?  Student response: Correct Response Student Response Answer Choices x Question 7   (5 points) Angie is injured in an automobile accident and sues the driver of the truck that struck her car. The court finds the  driver liable and awards Angie $10,000 to pay her medical expenses, $20,000 for her pain and suffering, and  $5,000 for loss of income while she was unable to work. The court also finds the truck driver negligent and awards  Angie $50,000 in punitive damages. Which of the following statements concerning the receipt of these payments  is/are correct? I-Angie is not taxed on any of the payments because they relate to a personal physical injury. II-Angie must include the loss of income payment in her gross income. III-The punitive damage payment is taxable.  Student response: Correct Response Student Response Answer Choices x
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