derek was injured in a vehicular accident in 2018. He incurred and paid medical expenses of P20,000 and legal tees of P10,000 during the year. He received P170,000 as settlementfrom the insurance company which insured the car owned by the other party involved in the accident. From the above payments and transactions, the amoun

derek was injured in a vehicular accident in 2018. He incurred and paid medical expenses of P20,000 and legal tees of P10,000 during the year. He received P170,000 as settlementfrom the insurance company which insured the car owned by the other party involved in the accident. From the above payments and transactions, the amoun

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter5: Deductions For And From Agi

Section: Chapter Questions

Problem 25MCQ

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Leland pays premiums of 5,000 for an insurance policy in the face amount of 25,000 upon the life of Caleb and subsequently transfers the policy to Tyler for 7,500. Over the years, Tyler pays subsequent premiums of 1,500 on the policy. Upon Calebs death, Tyler receives the proceeds of 25,000. As a result, what amount is Tyler required to include in his gross income?
In 2019, Lou has a salary of $53,300 from her job. She also has interest income of $1,600 and dividend income of $ 400. Lou is single and has no dependents. During the year, Lou sold silver coins held as an investment for a $7,000 loss. Calculate the following amounts for Lou: Adjusted gross income $ ____________________ Standard deduction $ ____________________ Taxable income $ ____________________
Joy incurs the following expenses in her business. When can she deduct the expenses if she uses the accrual method of accounting? the cash method? a. Joy rents an office building for 750 a month. Because of a cash flow problem, she is unable to pay the rent for November and December 2019. On January 5, 2019, Joy pays the 2,250 rent due for November, December, and January. b. Joy borrows 60,000 on a 1-year note on October 1, 2019. To get the loan, she has to prepay 6,200 in interest. c. Joy owes employees accrued wages totaling 20,000 as of December 31, 2019. The accrued wages are paid in the regular payroll on January 5, 2020. d. Joy purchases 2,400 worth of supplies from a local vendor. The supplies are delivered on January 29, 2019. They are fully used up on December 30, 2019. Because of unusual circumstances, a bill for the supplies arrives from the vendor on January 10, 2020, and is promptly paid. e. While at a trade convention, Joy purchases some pens and paperweights to send out as holiday gifts to her clients. She charges the 700 cost to her credit card in December 2019. She pays the credit card bill in January 2020.
Chelsea, who is single, purchases land for investment purposes in 2014 at a cost of 22,000. In 2019, she sells the land for 38,000. Chelseas taxable income without considering the land sale is 100,000. What is the effect of the sale of the land on her taxable income, and what is her tax liability?
Sammy and Monica, both age 67, incur and pay medical expenses in excess of insurance reimbursements during the year as follows. Sammy and Monicas 2019 AGI is 130,000. They file a joint return. Chuck and Carter are Sammy and Monicas dependents. a. What is Sammy and Monicas medical expense deduction for regular income-tax purposes? b. What is Sammy and Monica's AMT adjustment for medical expenses?
During the year, Rachel earned 18,000 of interest income on private activity bonds that she had purchased in 2014. She also incurred interest expense of 7,000 in connection with amounts borrowed to purchase the bonds. How do these amounts affect Rachels taxable income? Could there be a related beneficial effect in calculating AMTI? Explain.
Mr. X was injured in a vehicular accident in 2018. He incurred and paid medical expenses of P20,000 and legal fees of P10,000 during the taxable year. In 2020, he received P70,000 as settlement from the insurance company which insured the car owned by the other party involved in the accident. From the above payments and transactions, the amount of taxable income in 2020 is? a. P70,000 b. P50,000 c. P40,000 d. zero
Charlotte was injured in a vehicular accident in 2022. He incurred and paid medical expenses of P120,000 and legal fees of P50,000 during the year. In 2023, he received P70,000 as settlement from the insurance company which insured the car owned by the other party involved in the accident. From the above payments and transactions, how much amount is to be included as part of gross income?
An individual suffered injuries in a vehicular accident in 2020. Consequently, he incurred and paid medical expenses of P300,000 and legal fees of P100,000 during the year. Later during the year, he accepted P500,000 settlement offered by the owner of the vehicle. Required: Determine the amount of taxable income of the individual who suffered the injury.
Mrs. Sanchez Mira had a gross taxable compensation income ofP400,000. She also earned an additional P2,000 by investing hermoney in time deposits plus P3,000 interest income from lendingmoney to a friend. Compute her taxable income.
Joshua was sideswiped by Vernon in a vehicular accident on June 1, 2022. Consequently, he incurred and paid medical expenses of PHP 400,000 and legal fees of PHP 200,000 during the year. During the following month, he accepted the settlement offered by Vernon amounting to PHP 800,000. How much is the amount of income taxable to Joshua in 2022 0 800,000 100,000 200,000
In 2023, Theresa was in an automobile accident and suffered physical injuries. The accident was caused by Ramon's negligence. In 2024, Theresa collected from his insurance company. She received $15,000 for loss of income, $10,000 for pain and suffering, $50,000 for punitive damages, and $6,000 for medical expenses that she had deducted on her 2023 tax return (the amount in excess of 7.5% of adjusted gross income). This increased her itemized deductions to a total that was $6,000 more than the standard deduction. As a result of this, Theresa's 2024 gross income is increased by $56,000. O True O False