1. Which of the following items is not included in the recipient's gross income?
A. Alimony
B. Unemployment compensation from a state government
C. Gain on sale of an antique car
D. Welfare payments from a state government
2. Which of the following items is included in the recipient's gross income?
A. Life insurance death benefit
B. Legal award for personal injury
C. Legal award for punitive damages
D. Scholarship for tuition, fees, and books
3. Polly received the following items this year. Compute Polly's gross income.
A. $59,600
B. $58,000
C. $53,000
D. $50,000
4. James Dean received the following this year.
Scholarship for college tuition and fees 20,000
Scholarship for college room and board 12,500
Chamber of commerce citizenship award 1,500
Inheritance from great Uncle 38,000
Compute James' gross income.
A. $12,500
B. $14,000
C. $34,000
D. None of the above.
5. Which of the following is excluded from gross income?
A. $50,000 slot machine winnings
B. $13,900 value of Hawaiian vacation won on a game show
C. $85,000 Pulitzer prize for journalism
D. None of the above is excluded.
6. Which of the following statements about divorce settlements is false?
A. Alimony is excluded from the recipient's gross income.
B. Child support is excluded from the recipient's gross income.
C. Alimony is an above-the-line deduction for the payer.
D. None of the above is false.
7. Mr. and Mrs. Trent divorced in 2010. Pursuant to the divorce, Mr. Trent transferred marketable securities (FMV $100,000; basis $67,000) to Mrs. Trent. In 2011, Mrs. Trent sold the securities for $112,000. Which of the following statements is true?
A. Mrs. Trent recognized a $45,000 gain in 2011.
B. Mrs. Trent recognized $100,000 income in 2010.
C. Mrs. Trent recognized a $12,000 gain in 2011.
D. Mrs. Trent recognized no income in 2010 and no gain in 2011.
8. Mr. and Mrs. Shohler received $25,200 Social Security benefits this year. Their only other source of income was Mrs. Shohler's $10,479 taxable pension from her former employer. How much of their Social Security is included in gross income?
A. $0
B. $12,600
C. $21420
D. $25,200
9. Which of the following government transfer payments is included in the recipient's gross income?
A. Food stamps
B. Need-based welfare payments
C. Unemployment compensation
D. None of the above is included.
10. Six years ago, Milo Lenz, an amateur artist, sculpted a garden gnome as a gift for his mother. This year, his mother sold the gnome on eBay for $1,200. What is the amount and character of the mother's gain?
A. No gain recognized on the sale of a personal asset.
B. $1,200 ordinary gain.
C. $1,200 long-term capital gain.
D. None of the above.
11. Three years ago, Suzanne bought a new personal automobile for $26,900. This year, she sold it for $19,000. What is the amount and character of Suzanne's gain or loss?
A. No gain or loss recognized on the sale of a personal asset.
B. $19,000 long-term capital gain.
C. $7,900 ordinary loss.
D. $7,900 long-term capital loss.
12. Which of the following expenditures is not a medical expense for federal tax purposes?
A. Payment for eyeglasses
B. Health insurance premiums
C. Payment for prescription antibiotics
D. All of the above are deductible medical expenses
13. Dotty incurred the following medical expenses in 2012. Dotty's insurance company reimbursed herfor $8,800 of these expenses. If Dotty's AGI is $47,200, compute her medical expense deduction.
A. $0
B. $1,320
C. $10,120
D. $13,660
14. Using the facts in Question 13 for expenditures in 2013, compute Dotty’s medical expense deduction: ____________________
15. Spencer paid the following taxes this year. Compute Spencer's itemized deduction for taxes.
A. $5,725
B. $13,615
C. $9,025
D. $12,023