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5 Cards in this Set

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Gordon, age 70, is retired and works part-time as a security guard earning $8,000. He received $5,000 interest from a saving account and $2,500 interest from tax-exempt municipal bonds. His Social Security benefits were $12,000 and his taxable pension was $6,000. To determine if any of his Social Security is taxable, Gordon should compare how much of his income to the $25,000 base amount?
A. $27,500
B. $21,500
C. $19,000
D $25,000
B. $21,500

the $2,500 in tax-exempt interest and $6,000 in pension income should be included in modified AGI.
During an all-employee awards ceremony, Exercycle Company gave Mollie a new bicycle for her outstanding safety record. This award was presented to Mollie for her services to the company and in accordance with Exercycle’s qualified employee achievement awards program. The bicycle cost Exercycle $1,200 and has a fair market value of $1,700. What amount must Mollie include in income?
A.$1,200
B. $0
C. $1,700
D. $500
B. $0
the cost of the award is not included in income unless the cost of the award exceeds the deduction.
During the current year, Mr. French received state unemployment benefits of $2,500 and $700 of supplemental unemployment benefits from a company-financed fund. The union paid Mr. French an additional $2,000 as strike benefits. What amount must Mr. French include in income for the current year?
A. $2,500
B. $3,200
C. $4,500
D. $5,200
D. $5200
the $700 from the company-financed fund must be included in gross income.
As a result of a fire, Sam had to vacate his apartment for a month and move to a motel. His rent for the apartment had been $600 per month. No rent was charged for the month the apartment was vacated. His motel rent for this month was $1,000. He normally pays $200 a month for food, but food expenses for the month he lived in the motel were $500. He received $1,100 from his insurance company to cover his living expenses. Based on this information, determine the amount, if any, he must include in income.
DA. $0
B. $300
C. $400
D. None of the answers are correct.

the exclusion applies only to the excess of actual expenses over normal expenses
Fred received the following from his employer during the year: $25,000 regular wages, $5,000 cash bonus, trip valued at $1,000, and parking valued at $100 per month at a lot adjacent to the office building. His employer contributed $200 per month to a 401(k) plan for Fred. Fred chose not to set aside any of his pay for the retirement plan. How much income should Fred report?
A. $34,600
B. $33,400
C. $31,000
D. $32,200

the $1,200 parking benefit and $2,400 employer contribution to Fred’s 401(k) are not included in gross income.