Income tax doctrine, business and finance homework help

Which tax doctrine or principle states that a taxpayer usually has gross income when the taxpayer engages in a sale or exchange of products or services?

	A.	Realization principle
	B.	Assignment of income doctrine
	C.	Constructive receipt doctrine
	D.	Wherewithal to pay principle

Which tax principle or doctrine is the reason that taxpayers may subtract the adjusted basis of an asset sold or exchanged in calculating the gain realized on its sale or exchange?

	A.	Recovery of capital doctrine (also known as return of capital principle)
	B.	Assignment of income doctrine
	C.	Constructive receipt doctrine
	D.	Wherewithal to pay principle

In 2014, a taxpayer paid $3,200 in state income tax.  The taxpayer deducted this amount as an itemized deduction on Schedule A of Form 1040 for tax year 2014.  The taxpayer’s total itemized deductions exceeded the standard deduction by $400.  In 2015, the taxpayer received a refund of $700 of the state income taxes the taxpayer paid in 2014.  On the taxpayer’s U. S. individual income tax return for 2015, the taxpayer must include ____ of the $700 refund of state income taxes received in 2015.

	A.	None
	B.	$350
	C.	$400
	D.	$700

Which of the following states is a community property state?

	A.	Louisiana
	B.	Georgia
	C.	Mississippi
	D.	Alabama

Bill is age 70.  On January 2, 2015, he invested $192,000 in a life annuity.  It will pay him $20,000 at the end of each year for life.  He does not elect any refund feature.  If he dies before recovering his capital, his estate will not receive a refund.  His life multiple is 16 years and no months.  He received one payment of $20,000 at the end of 2015.  How much must Bill include in his gross income in 2015 because of the annuity payment received?

	A.	None because he has not yet recovered his capital (basis) in the annuity
	B.	$8,000
	C.	$12,000
	D.	$20,000

Ron is retired and receives Social Security benefits.  He has an annual income of over $250,000 from interest and dividends.  What percentage of his Social Security benefits must he include in his gross income?

	A.	0%
	B.	50%
	C.	85%
	D.	100%

Which of the following does a taxpayer exclude from gross income?

	A.	Interest on municipal bonds
	B.	Interest on a late payment of a business bill received from a city
	C.	Capital gain on the sale of municipal bonds
	D.	All of the above are excluded from gross income

Sara is a candidate for a degree at a big public university.  During 2015, she received a scholarship of $20,000 in cash.  She used $12,000 of the scholarship for tuition and fees.  She used $2,000 for books, supplies, and equipment required for her course of study.  She used the remaining $6,000 of the scholarship for rent and food.  She was not required to work to receive the scholarship. How much of the $20,000 scholarship must she include in her gross income?

	A.	$0
	B.	$6,000
	C.	$8,000
	D.	$20,000

A single taxpayer may exclude up to _____ of gain on the sale of a principal residence provided that the taxpayer meets the requirements of Section 121.

	A.	$25,000
	B.	$100,000
	C.	$250,000
	D.	$500,000

Which of the following is included in the gross income of a taxpayer who has not filed bankruptcy and is solvent?

	A.	Group term life insurance provided by the taxpayer’s employer in the amount of $50,000
	B.	Discharge of indebtedness on an unsecured personal loan
	C.	Free lodging provided by the taxpayer’s employer that the taxpayer must accept as a condition of employment
	D.	Working condition fringe benefits