1) Under a divorce agreement executed this year, an ex-wife receives from her ex-husband cash of $25,000 annually for ten years. The agreement does not say that the payments are excludible from gross income. Does the ex-wife have gross income and, if so, how much? Can the ex-husband deduct the annual payments and, if so, is the deduction For AGI for From AGI? What Internal Revenue Code Sections answer these questions?
4) May a taxpayer claim a dependency exemption for a person if the taxpayer provides 50% or less of the person’s support. If so, under what circumstances?.
7) In general whatfactors determine who must file a federal income tax return? Is an individual required to file a tax return if he or she owes no tax?If an individual is not required to file a federal income tax return, are there situations in which the individual might want to file. Explain.
8) John and Joan had been married for 20 years before John died in 2012. Joan and her son Marley, age 21, continued to live at home in years 2012 2015. Marley worked part time (earning $5,000 in each of the four years). He also attended college on a part time basis. Joan
Provided more than 50% ofMarley’s support in each year. What is Joan’s filing status for 2012, 2013, 2014, and 2015?
Would Joan’s filing status change if Marley attended school fulltimerather than part time? If so, how?
9) Wanda is a single parent who maintained a household for her unmarried son Jordan, age 19, who worked fulltime and earned $16,000. Wanda provided about 40% of Jordan’s support but provided all the expenses of maintaining the household. What is Wanda’s 2014 tax filing status?
10) Tom and Mary are married and have one dependent son. In April, Tom left Mary a note that
he needed his freedom and was leaving her. As of December, Mary has neither heard from nor seen Tom. Mary fully supported
her daughter and completely maintained the household. What is Mary’s filing status?
12)Chinitais a single taxpayer, whose salary was $51,000 in 2014. In that year, she also suffered a $5,000 short-term capital loss. Her itemized deductions for the year totaled $4,000. What are Chinita’s 2014 (a) adjusted gross income; (b) taxable income; and (c) tax liability?
15. Geraldo rented an office building to Brian for $3,000 per month. On 12/29/13, Geraldo received a deposit of $4,000 in addition to the first and last months’ rent. Brian commenced occupancy of the building on 1/02/14. On 7/15/14, Brian closed his business and filed for bankruptcy. Geraldo collected rent for February, March, and April on the first day of each month. He received the May rent on 5/10/14, but collected no payments thereafter. Geraldo withheld $800 from Brian’s deposit because of damage to the property and $1,500 for unpaid rent. He refunded the balance of the deposit to Brian. What amount of the above payments should Geraldo have reported as gross income in 2013 and 2014?
16) Humphrey and Lauren filed a 2014 joint return. Humphrey earned $31,000 during the year before losing his job. Lauren received Social Security benefits of $5,000. What was the taxable portion of the Social Security benefits? What would have been the taxable portion of the Social Security benefits if Humphrey had earned $46,000 in 2014? Explain.
17) Ingrid inherited $10,000 of City of Baltimore, Maryland bonds in February. In March she received interest of $500 on the bonds, and in April she sold the bonds for a $200 gain. Ingrid redeemed Series EE U.S. Savings Bonds that she had purchased several years ago. The accumulated interest totaled $800. Ingrid also received $300 of interest on bonds issued by the City of Montreal, Canada. What amount of these receipts, if any, should Ingrid include in her gross income.
18) For each of the following, indicate whether the amount is taxable:
(a) Katrina won $3000 in the state lottery.
(b) Robert won a $500 prize for his entry in a poetry contest.
(c) Lizbeth was awarded $2,000 when she was selected “Teacher of the Year” by her local school district.
19) In each of the following situations, what amount must be included in the taxpayer’s gross income?
(a) Laverne received a $1,500 tuition scholarship to attend Fredonia Law School. In addition, Fredonia paid Laverne $4,000 per year to work part-time in the campus cafeteria.
(b) Marvin received a $10,000 football scholarship for attending Western University. His scholarship covered tuition, room, board, laundry, and books. $4,000 of the scholarship was designated for room and board and laundry. It was understood that Marvin would participate in the school’s intercollegiate football program, but he was not required to do so.
(c) Nightingale Nursing School requires all third-year students to work 20 hours per week at an affiliated local hospital. Each student is paid $10 per hour. Ruth, a third-year student, earned $10,000 for such work during the year.
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20) Lamar Corp. has four employees, for whom it provides group life insurance in accordance with a non-discrimination policy. The details are: Employee
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Age
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Key Employee
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Coverage
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Premiums
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Sandy
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62
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Yes
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$200,000
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$4,000
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Randy
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52
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Yes
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40,000
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700
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Mandy
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33
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No
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80,000
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600
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Candy
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33
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No
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40,000
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300
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