46. A taxpayer has the following source of income other than wages this year oil royalties of $1,000 rent of $15,000 non-employed compensation of 15,000 for consulting work performed on the side $1,000 manufacturing incentive payment from the manufacturer of the brand that the taxpayer sells at their job for meeting a sale goal $1,000 winning from a sweepstakes is the following statement true. A. The taxpayer is not taxed on miscellaneous income it is for their record in. B. Oil royalties are considered self-employment income C. Rental income is considered passive income. D. Prize and rewards are considered miscellaneous income.

46. A taxpayer has the following source of income other than wages this year oil royalties of $1,000 rent of $15,000 non-employed compensation of 15,000 for consulting work performed on the side $1,000 manufacturing incentive payment from the manufacturer of the brand that the taxpayer sells at their job for meeting a sale goal $1,000 winning from a sweepstakes is the following statement true. A. The taxpayer is not taxed on miscellaneous income it is for their record in. B. Oil royalties are considered self-employment income C. Rental income is considered passive income. D. Prize and rewards are considered miscellaneous income.

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter2: Gross Income And Exclusions

Section: Chapter Questions

Problem 34P

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Similar questions

The taxpayer performs services with payment due from the customer within 30 days. All customers pay within the time limit. What would be the benefit to the taxpayer using the cash method of accounting rather than the accrual method?
How do the all events and economic performance requirements apply to the following transactions by an accrual basis taxpayer? a. The company guarantees its products for six months. At the end of 2019, customers had made valid claims for 600,000 that were not paid until 2020. Also, the company estimates that another 400,000 in claims from 2019 sales will be filed and paid in 2020. b. The accrual basis taxpayer reported 200,000 in corporate taxable income for 2019. The state income tax rate was 6%. The corporation paid 7,000 in estimated state income taxes in 2019 and paid 2,000 on 2018 state income taxes when it filed its 2018 state income tax return in March 2019. The company filed its 2019 state income tax return in March 2020 and paid the remaining 5,000 of its 2019 state income tax liability. c. An employee was involved in an accident while making a sales call. The company paid the injured victim 15,000 in 2019 and agreed to pay the victim 15,000 a year for the next nine years.
Lisa records nonrefundable Federal income tax credits of 65,000 for the year. Her regular income tax liability before credits is 190,000, and her TMT is 150,000. a. What is Lisas AMT? b. What is Lisas regular income tax liability after credits?
Determine whether the taxpayer has income that is subject to taxation in each of the following situations: a. Capital Motor Company is going out of business. As a result, June is able to purchase a car for 12,000; its original sticker price was 25,000. b. Chuck is the sole owner of Ransom, Inc., a corporation. He purchases a machine from Ransom for 10,000. Ransom had paid 50,000 for the machine, which was worth 30,000 at the time of the sale to Chuck. c. Gerry is an elementary school teacher. She receives the Teacher of the Month Award for February. As part of the award, she gets to drive a new car supplied by a local dealer for a month. The rental value of the car is 400 per month. d. Payne has worked for Stewart Company for the last 25 years. On the 25th anniversary of his employment with Stewart, he receives a set of golf clubs worth 1,200 as a reward for his years of loyal service to the company. e. Anna enters a sweepstakes contest that was advertised on the back of a cereal box, and wins 30,000. The prize will be paid out in 30 annual installments of 1,000. She receives her first check this year. f. Terry buys an antique vase at an estate auction for 780. Upon returning home, she accidentally drops the vase and finds that a 100 bill had been taped inside it.
Troy, a cash basis taxpayer, is employed by Eagle Corporation, also a cash basis taxpayer. Tray is a full-time employee of the corporation and receives a salary of 60,000 per year. He also receives a bonus equal to 10% of all collections from diems he serviced during the year. Determine the tax consequences of the following events to the corporation and to Troy: a. On December 31, 2019, Troy was visiting a customer. The customer gave Troy a 10,000 check payable to the corporation for appraisal services Troy performed during 2019. Troy did not deliver the check to the corporation until January 2020. b. The facts are the same as in part (a), except that the corporation is an accrual basis taxpayer and Troy deposited the check on December 31, but the bank did not add the deposit to the corporations account until January 2020. c. The facts are the same as in part (a), except that the customer told Troy to hold the check until January 2020 when the customer could make a bank deposit that would cover the check.
Determine the taxpayers gross income for tax purposes in each of the following situations: a. Deb, a cash basis taxpayer, traded a corporate bond with accrued interest of 300 for corporate stock with a fair market value of 12,000 at the time of the exchange. Debs cost of the bond was 10,000. The value of the stock had decreased to 11,000 by the end of the year. b. Deb needed 10,000 to make a down payment on her house. She instructed her broker to sell some stock to raise the 10,000. Debs cost of the stock was 3,000. Based on her brokers advice, instead of selling the stock, she borrowed the 10,000 using the stock as collateral for the debt. c. Debs boss gave her two tickets to the Rabid Rabbits rock concert because she met her sales quota. At the time she received the tickets, each ticket had a face price of 200 and was selling on eBay for 300. On the date of the concert, the tickets were selling for 250 each. Deb and her son attended the concert.
Arthur Wesson, an unmarried individual who is age 68, reports taxable income of 510,000 in 2019. He records positive AMT adjustments of 80,000 and preferences of 35,000. Arthur itemizes his deductions, and his regular tax liability in 2019 is 153,694. a. What is Arthurs AMT? b. What is the total amount of Arthurs tax liability? c. Draft a letter to Arthur explaining why he must pay more than the regular income tax liability. Arthurs address is 100 Colonels Way, Conway, SC 29526.
Use the 2021 FICA tax rates, shown, to answer the following question. If a taxpayer is self-employed and earns $156,000, what are the taxpayer's FICA taxes? Employee's Rates 7.65% on first $142,800 of income 1.45% of income in excess of $142,800 Matching Rates Paid by the Employer 7.65% on first $142,800 paid in wages 1.45% of wages paid in excess of $142,800 Self-Employed Rates 15.3% on first $142,800 of net profits 2.9% of net profits, in excess of $142,800 The FICA taxes are $ (Round to the nearest cent as needed.)
Enter the taxpayer's gross income for each of the following independent situations. If an amount is zero, enter "0". Taxpayer's Gross Income a. Darrin received a salary of $50,000 from his employer, Green Construction. $fill in the blank 1 b. In July, Green gave Darrin an all - expense - paid trip to Las Vegas (value of $3,000) for exceeding his sales quota. $fill in the blank 2 c. Marta received $10,000 from her employer to help her pay medical expenses not covered by insurance. $fill in the blank 3 d. Blake received $15,000 from his deceased spouse' s employer as compensation for a bonus earned prior to death. $fill in the blank 4 e. Clint collected $50,000 as the beneficiary of a group term life insurance policy when his wife died. The premiums on the policy were paid by his deceased wife's employer. $fill in the blank 5
B7.
A taxpayer employs a qualified PWD for a total salary of P50,000. Assuming taxpayer meets all requirements, how much may he claim as special deduction from gross income? a. 50,000 b. 12,500 c. 10,000 d. 7,500