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Albert established a qualified tuition program for each of his twins, Kim and Jim. He started each fund with $20,000 when the ch were five years old. Albert made no further contributions to his children's plans. Thirteen years later, both children have graduate high school. Kim's fund has accumulated to $45,000, and Jim's has accumulated to $42,000. Kim decides to attend a state unive which will cost $60,000 for four years (tuition, fees, room and board, and books). Jim decides to go to work instead of going to During the current year, $7,500 is used from Kim's plan to pay the cost of her first semester in college. Because Jim is not going college now or in the future, Albert withdraws the $42,000 plan balance and gives it to Jim to start his new life after high school.

Albert established a qualified tuition program for each of his twins, Kim and Jim. He started each fund with $20,000 when the ch were five years old. Albert made no further contributions to his children's plans. Thirteen years later, both children have graduate high school. Kim's fund has accumulated to $45,000, and Jim's has accumulated to $42,000. Kim decides to attend a state unive which will cost $60,000 for four years (tuition, fees, room and board, and books). Jim decides to go to work instead of going to During the current year, $7,500 is used from Kim's plan to pay the cost of her first semester in college. Because Jim is not going college now or in the future, Albert withdraws the $42,000 plan balance and gives it to Jim to start his new life after high school.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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engageNOWv2 | Online X < Irn/takeAssignment/takeAssignmentMain.do?invoker=assignments&takeAssignmentSession st Buy® Visa... Bb Welcome, DENADA... G G Grammarly Bb Announcements - 1... 13 (10) WhatsApp All $ ChatGPT Q Search Problem 5-55 (LO. 2) Albert established a qualified tuition program for each of his twins, Kim and Jim. He started each fund with $20,000 when the children were five years old. Albert made no further contributions to his children's plans. Thirteen years later, both children have graduated from high school. Kim's fund has accumulated to $45,000, and Jim's has accumulated to $42,000. Kim decides to attend a state university, which will cost $60,000 for four years (tuition, fees, room and board, and books). Jim decides to go to work instead of going to college. During the current year, $7,500 is used from Kim's plan to pay the cost of her first semester in college. Because Jim is not going to college now or in the future, Albert withdraws the $42,000 plan balance and gives it to Jim to start his new life after high school. b. What are the tax consequences to Kim and Albert of the $7,500 being used for the first semester's higher education costs? Neither Albert nor Kim report the $7,500 in gross income. F5 a. During the period since the plans were established, should Albert or the twins have been including the annual plan earnings in gross income? No. The plans' earnings are excluded from Albert's and the twins' gross income. d. What are the tax consequences to Albert and Jim of Jim's qualified tuition program being closed? % 5 c. Because of her participation in the qualified tuition program, Kim received a 10% reduction in tuition charges; so less than $7,500 was withdrawn from her account. Is either Albert or Kim required to include the value of this discount in gross income? Neither Albert nor Kim report the value of the discount in gross income. X x | G benefit which exceed the XQ Tax Accounting HW Chap X + Locator-assignment-take&inpr... ☆ 3$ O F6 A 6 of gross income and F7 & 7 S 8 F8 8 F9 55 prt sc - Grammarly F10 9 subject to a 10% additional tax. home F11 0 >>> end ☐ ☐ F12 - insert + 11 All Bo 7:35 AM 3/1/2024 delete 3
Transcribed Image Text:engageNOWv2 | Online X < Irn/takeAssignment/takeAssignmentMain.do?invoker=assignments&takeAssignmentSession st Buy® Visa... Bb Welcome, DENADA... G G Grammarly Bb Announcements - 1... 13 (10) WhatsApp All $ ChatGPT Q Search Problem 5-55 (LO. 2) Albert established a qualified tuition program for each of his twins, Kim and Jim. He started each fund with $20,000 when the children were five years old. Albert made no further contributions to his children's plans. Thirteen years later, both children have graduated from high school. Kim's fund has accumulated to $45,000, and Jim's has accumulated to $42,000. Kim decides to attend a state university, which will cost $60,000 for four years (tuition, fees, room and board, and books). Jim decides to go to work instead of going to college. During the current year, $7,500 is used from Kim's plan to pay the cost of her first semester in college. Because Jim is not going to college now or in the future, Albert withdraws the $42,000 plan balance and gives it to Jim to start his new life after high school. b. What are the tax consequences to Kim and Albert of the $7,500 being used for the first semester's higher education costs? Neither Albert nor Kim report the $7,500 in gross income. F5 a. During the period since the plans were established, should Albert or the twins have been including the annual plan earnings in gross income? No. The plans' earnings are excluded from Albert's and the twins' gross income. d. What are the tax consequences to Albert and Jim of Jim's qualified tuition program being closed? % 5 c. Because of her participation in the qualified tuition program, Kim received a 10% reduction in tuition charges; so less than $7,500 was withdrawn from her account. Is either Albert or Kim required to include the value of this discount in gross income? Neither Albert nor Kim report the value of the discount in gross income. X x | G benefit which exceed the XQ Tax Accounting HW Chap X + Locator-assignment-take&inpr... ☆ 3$ O F6 A 6 of gross income and F7 & 7 S 8 F8 8 F9 55 prt sc - Grammarly F10 9 subject to a 10% additional tax. home F11 0 >>> end ☐ ☐ F12 - insert + 11 All Bo 7:35 AM 3/1/2024 delete 3
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