Multiple choice Tax Questions Peter and Eileen are married and live in a common law state. Peter wants to make gifts to their five children in 2009. What is the maximum amount of the annual exclusion they will be allowed for these gifts? A) $60,000. B) $65,000. C) $120,000. D) $130,000. E) None of the above. 2. Which is a primary source of tax law? A) J. W. Yarbo v. Comm., 737 F.2d 479 (CA-5, 1984). B) Article by a Federal judge in Harvard Law Review. C) Technical Advice Memoranda. D) Letter ruling. E) All of the above are primary sources. 3. Jerry purchased a U.S. Series EE savings bond for $279. The bond has a maturity value in 10 years of $500 and yields 6% interest. This is the first Series EE bond that Jerry has ever owned. A) Jerry must report the interest income each year using the original issue discount rules. B) Jerry can report all of the $221 interest income in the year the bond matures. C) The interest on the bonds is exempt from Federal income tax. D) Jerry must report ($500 $279)/10 = $22.10 interest income each year he owns the bond. E) None of the above. 4. Home Office, Inc., leased a copying machine to a new customer on December 27, 2009. The machine was to rent for $500 per month for a period of 36 months beginning January 1, 2010. The customer was required to pay the first and last months rent at the time the lease was signed. The customer also was required to pay an $800 damage deposit. Home Office must recognize as income for the lease: A) $1,000 in 2009, if Home Office is an accrual basis taxpayer. B) $1,000 in 2010, if Home Office is a cash basis taxpayer. C) $1,800 in 2009, if Home Office is a cash basis taxpayer. D) $0 in 2009, if Home Office is an accrual basis taxpayer. E) None of the above. 5. Kathy operates a gym. She sells memberships that entitle the member to use the facilities at any time. A one-year membership costs $360 ($360/12 = $30 per month); a two-year membership costs $600 ($600/24 = $25 per month). Cash payment is required at the beginning of the membership period. On July 1, 2009, Kathy sold a one-year membership and a two-year membership. I. If Kathy is a cash basis taxpayer, her 2009 gross income from the contracts is $960 ($360 + $600). II. If Kathy is an accrual basis taxpayer, her 2009 gross income from the contracts is $330 [(6/12 ? $360) + (6/24 ? $600)]. III. If Kathy is an accrual basis taxpayer, her 2010 gross income from the contracts is $630 [(6/12)($360) + $450]. A) Only I is true. B) Only I and II are true. C) Only II and III are true. D) I, II, and III are true. E) None of the above. 6. Ben was diagnosed with a terminal illness. His physician estimated that Ben would live no more than 18 months. After he received the doctors diagnosis, Ben cashed in his life insurance policy to pay some medical bills. Ben had paid $12,000 in premiums on the policy, and he collected $50,000, the cash surrender value of the policy. Henry enjoys excellent health, but he cashed in his life insurance policy to purchase a new home. He had paid premiums of $12,000 and collected $50,000 from the insurance company. A) Neither Ben nor Henry is required to recognize gross income. B) Both Ben and Henry must recognize $38,000 ($50,000 $12,000) of gross income. C) Henry must recognize $38,000 ($50,000 $12,000) of gross income, but Ben does not recognize any gross income. D) Ben must recognize $38,000 ($50,000 $12,000) of gross income, but Henry does not recognize any gross income. E) None of the above. Roger, age 19, is a full-time graduate student at State College. During 2009, he received the following payments: State scholarship for ten months (tuition and books) $3,600 Loan from college financial aid office 1,500 Cash support from parents 3,000 Cash prize awarded in contest 500 $8,600 Roger served as a resident advisor in a dormitory and therefore the university waived the $2,400 charge for the room he occupied. What is Rogers adjusted gross income for 2009? A) $11,000. B…
Looking for solution of this Assignment?
WHY CHOOSE US?
We deliver quality original papers |
Our experts write quality original papers using academic databases. |
Free revisions |
We offer our clients multiple free revisions just to ensure you get what you want. |
Discounted prices |
All our prices are discounted which makes it affordable to you. Use code FIRST15 to get your discount |
100% originality |
We deliver papers that are written from scratch to deliver 100% originality. Our papers are free from plagiarism and NO similarity |
On-time delivery |
We will deliver your paper on time even on short notice or short deadline, overnight essay or even an urgent essay |