Reference no: EM13586725

[1] During the current year, Mr. French received state unemployment benefits of $2,500 and $700 of supplemental unemployment benefits from a company financed fund. The union paid Mr. French an additional $2,000 out of regular union dues. What amount must Mr. French include in income for the current year?
A. $2,500
B. $4,500
C. $3,200
D. $5,200

[2] Generally, which of the following should be included in gross income?
A. Life insurance proceeds.
B. Reimbursements from your employer of a moving expense you properly deducted
on last year's tax return.
C. Cash rebate from a dealer when a car is purchased.
D. Child support payments.

[3] Which of the following should not be included in Mr. W's gross income for the current year?
A. $200 in dental work Mr. W received in exchange for repairs made by Mr. W to his dentist's residence.
B. A new car worth $7,000 given to Mr. W by his employer for his valuable services.
C. $5,000 in executor fees received from the estate of Mr. W's brother.
D. Life insurance proceeds of $10,000 received as a beneficiary as a result of the death of Mr. W's brother who owned the policy.

[4] Which of the following is not considered actual receipt or "constructive receipt" of income in the current year?

A. A payment on a sale of real property was placed in escrow on December 15 of the current year but not received by Taxpayer A until January 10 of the following year, when the transaction was closed.
B. Taxpayer A was informed his check for services rendered was available on December 15 of the current year, but he waited until January 15 of the following year to pick up the check.
C. Taxpayer B received a check on December 30 of the current year for services rendered but was unable to make a deposit until January 4 of the following year.
D. Earned income of Taxpayer A was received by his agent on December 29 of the current year but not received by A until January 5 of the following yea

[5] Colin Rosson is a freelance writer who reports income on the cash basis. Some of his current-year transactions follow: Cash fees received for articles, etc. $55,000 HDTV won in resort promotion (had to attend promotion to win) 300 Loss on sale of business furniture (100) Appreciation on investment property 1,000  What is Colin's gross income?
A. $55,900
B. $55,300
C. $55,000
D. $55,200

[6] Ruby Diaz is a commissioned salesperson. She is a cash-method taxpayer. At the end of the year, her earnings for the year were $75,000. During the year, she also received $10,000 in advances on future commissions and repaid $8,000. How much income should Ruby report for the year?
A. $75,000
B. $87,000
C. $85,000
D. $77,000

[7] In the current year, Emil Gow won $5,000 in a state lottery and spent $400 for the purchase of lottery tickets. Emil elected the standard deduction on his current-year income tax return. The amount of lottery winnings that should be included in Emil's current-year gross income is
A. $700
B. $5,000
C. $0
D. $4,600

[8] Based on the following, how much should Mr. Big include in income in his federal income tax return?
Punitive damages awarded by jury
related to a leg injury from an accident $10,000
Kickbacks received on sale of goods
(not treated as a reduction elsewhere) 5,000
Money borrowed from a bank 8,000
Increase in the value of an asset 1,000
A. $16,000
B. $15,000
C. $10,000
D. $23,000

[9] During the previous year, Carrie paid $500 of estimated state income tax payments, which she also deducted for federal income tax purposes. Early in the current year, Carrie received a refund of $300 of these state tax payments. Carrie immediately placed an illegal bet at 5-to-1 odds and won an additional $1,500. Later in the year, Carrie was short of money and robbed a tavern of $4,000. How much should Carrie include in her income for the current year?
A. $1,800
B. $1,500
C. $5,800
D. $0

[10] Clark filed Form 1040EZ for the previous tax year. In the current year, Clark received a state income tax refund of $900, plus interest of $10, for overpayment of the previous year's state income taxes. In addition, Clark received a $1,000 income tax refund from
the IRS. How much income must Clark include in his current-year federal tax return as a result of these refunds?
A. $910
B. $10
C. $900
D. $1,910

[11] Gary and Gladys invest in bonds. In the current year, they received the following interest:
California general revenue bonds $ 800
New York City sanitation fund bonds 1,000
Seattle School District bonds 400
AT&T 20-year bonds 600
The state and local bonds are neither private activity bonds nor arbitrage bonds. How much interest income may Gary and Gladys exclude from gross income on their joint return?
A. $0
B. $800
C. $1,800
D. $2,200

[12] Which of the following distributions is nontaxable?

A. Mutual fund distribution from its net realized long-term capital gains in the amount of $1,000. You have an adjusted basis of $10,000 in the mutual fund.

B. Return of capital distribution from a utility company in the amount of $2,000. You have a zero basis in this stock.

C..Dividend on insurance policy in the amount of $1,000. As of the date of this dividend, your net premiums exceed the total dividends by $3,500.

D. Your $25,000 share of ordinary income earned in the current year by an S corporation.

[13] Rupert wanted to give his son and daughter a gift of $10,000 each. However, the son was not trustworthy enough to receive such a large sum of money at one time. Therefore, Rupert decided to invest $10,000 and only give the son the income each year. In the current year, this income amounted to $1,200, which Rupert transferred to the son. Rupert's daughter received her $10,000 outright in the current year. How much gross income must the son and daughter report, respectively, in the current year as a result of the gift?
Son Daughter
A. $0 $0
B. $1,200 $0
C. $1,200 $10,000
D. $10,000 $10,000