Question :
61. Which of the following would result in life insurance proceeds : 1313499
61. Which of the following would result in life insurance proceeds that are taxable to the recipient?
a. A life insurance policy transferred to a creditor in payment of a debt
b. A life insurance policy in which the insured is the daughter of the taxpayer and the beneficiary is the taxpayer
c. A life insurance policy transferred by a shareholder to a corporation
d. A life insurance policy purchased by a taxpayer insuring his or her business partner
e. A life insurance policy purchased by a corporation insuring an officer.
62. Nicole is a student at USB Law; she receives a $52,000 scholarship for 2014. Of the $52,000, $40,000 is used for tuition, $7,000 is used for books, and $5,000 is used for room and board. How much of the scholarship is excluded from taxable income for Nicole in 2014?
a. $5,000
b. $7,000
c. $45,000
d. $47,000
e. $52,000
63. To pay for college, Henry received the following:
$1,000 scholarship from the Thespian Club to pay for books
$5,000 scholarship from the Elks Lodge for tuition
$4,000 worth of room and board as a dorm supervisor through a work-study program
?
How much income must Henry report on his tax return?
a. $0
b. $4,000
c. $5,000
d. $6,000
e. $10,000
64. Robert works for American Motors. American Motors pays a $1,200 premium on Robert’s health insurance in 2014. Robert has an operation on his big toe in 2014 that cost $7,200. The insurance company paid for $6,800 of it. Which one of the following is true for 2014?
a. Robert must claim the $1,200 premium paid by his employer as income.
b. Robert must claim the $6,800 paid by the insurance company for the operation as income.
c. Robert must claim the $1,200 premium and the $6,800 insurance payment as income.
d. None of these events are taxable on his 2014 return.
65. Which of the following may be excluded from income?
a. Payment for the loss of an arm
b. Premiums for health insurance paid by the employer
c. Reimbursement from the insurance company for a physical examination
d. All of the above are excluded from gross income
e. None of the above are excluded from gross income
66. Anthony is a marine biologist who spends months living on a boat in the ocean studying the impact of runoff water a hundred miles off the coast as a part of his job. Which of the following sentences is the most accurate?
a. Lodging is included in his income.
b. He may exclude meals from his income.
c. The fuel used to power the boat is excluded from his income.
d. b & c are correct, not a.
e. All are correct.
67. In which of the following cases may the employee exclude the meals and/or lodging:
a. A taxpayer lives rent-free at the property she manages even though the owner does not require the manager to live on site.
b. A headmaster at a boarding school is required to be on campus all night.
c. A president of a major film studio receives a cash allowance to live in Beverly Hills.
d. An employee has an option of dining in an employer-sponsored cafeteria or dining out of the office.
68. An investor is comparing the following two bonds: a bond from ABC Corp which pays an interest rate of 9 percent per year and a municipal bond which pays an interest rate of 7.9 percent per year. The investor is in the 15 percent tax bracket. Which bond will give the investor a higher after-tax interest rate and for which reason?
a. The ABC bond because it pays a 9 percent interest rate, while the municipal bond only pays 7.9 percent .
b. The ABC bond because it pays an equivalent after-tax rate of 10.6 percent, while the municipal bond pays out an equivalent after-tax rate of 9.3 percent.
c. The municipal bond because it pays an equivalent after-tax rate of 9.3 percent, while the ABC bond pays out a 9 percent interest rate.
d. The municipal bond because it pays an equivalent after-tax rate of 7.9 percent, while the ABC bond pays out an equivalent after-tax rate of 7.65 percent.
e. None of the above is correct.
69. Which taxpayer would benefit the most from a tax-free municipal bond compared to a taxable bond?
a. A taxpayer whose only income is from Social Security
b. A taxpayer who won a mega-million-dollar lottery
c. The average blue collar worker
d. They would all equally benefit from the tax-free municipal bond
70. Steve worked as a tech supervisor for a computer company. In September of 2014, he was laid off. He was paid unemployment compensation for the rest of the year totaling $7,000. Which of the following is true?
a. Steve will have to report all $7,000 of the unemployment compensation as income.
b. Steve will have to report $4,600 of the unemployment compensation as income.
c. Unemployment compensation is never taxable.
d. As long as the unemployment compensation payments are less than the taxpayer’s previous salary, they are not taxable.
e. None of the above is true.
