Problem 1: Mr. T has been a night watchman at Y Company for 10 years. During the current year, he received the following payments from Y Company:
Salary: $15,000
Hospitalization insurance premiums: $3,600
Required lodging on Y's premises for Y's convenience as a condition to T's employment: $2,400
Reward for preventing a break-in: $1,000
Christmas ham (value): $15
What amount is included in Mr. T's gross income in the current year?
A. $17,400
B. $16,015
C. $16,000
D. $15,000
Problem 2: In 2013, Mr. and Mrs. Birch are both over 65 years of age and are filing a joint return. Their income for the current year consisted of the following:
Taxable interest: $6,000
Taxable dividends: $8,000
Social Security payments (Mr. and Mrs. Birch combined): $15,000
Tax-exempt interest: $4,000
Taxable pension: $15,000
They did not have any adjustments to income. What amount of Mr. and Mrs. Birch's Social Security benefits is taxable?
A. $0
B. $4,250
C. $7,500
D. $8,500
Problem 3: Mrs. Dee's husband died in the current year. She chose to receive the proceeds of her husband's $100,000 life insurance policy over a 10-year period. The monthly installments are $1,200 each. What is the amount of the annual payments that represents gross income to Mrs. Dee?
A. $0
B. $2,000
C. $4,400
D. $14,400.