Need accounting help with Federal income Tax – True and False

All questions are true and false

Withdrawals from a traditional IRA must begin when the taxpayer reaches age 70 1/2.

 True

 False

If a taxpayer converts a traditional IRA into a Roth IRA, then when distributions are taken from the Roth at retirement a portion of the distributions will be taxable.

 True

 False

If a taxpayer does not qualify to deduct contributions to a traditional IRA then no contributions can be made to the IRA.

 True

 False

Distributions from Roth IRAs are generally not taxable as long as certain time requirements have been met.

 True

 False

Contributions to Roth IRAs are deductible as long as the taxpayer’s income does not exceed certain limits.

 True

 False

M Company provides all of its employees with a gift certificate valued at $25 to a local restaurant to celebrate the company’s 25th anniversary. This gift is not included in the employee’s income.

 True

 False

C works at a department store and is allowed to purchase a dress for $30 which the store had bought for $25 from its suppliers. The retail price for the dress at the store is $50. C does not have to report any income from this purchase.

 True

 False

T works at a fast-food restaurant and is allowed each day to bring home hamburgers and other items that had not been sold for his wife and four children. Since the restaurant did not sell these items T does not have to include the value of this food in his taxable income.

 True

 False

D occasionally uses the copy machine at his office to copy handouts for a class he teaches at a local college. During the current year he made a total of 40 copies. The value of these copies will be included in his taxable income.

 True

 False

S works at a hospital and is allowed to eat in the hospital’s cafeteria free of charge so she will be on call if an emergency arises. The value of these meals is excluded from S’s taxable income.

 True

 False

P’s employer pays the health insurance premiums for P and his family. These premiums can be excluded from P’s taxable income.

 True

 False

G ‘s employer provides her with a $75,000 group term life insurance policy that does not discriminate. G can exclude this benefit from her taxable income.

 True

 False

W owns a long-term care policy that paid her $150 per day in the current year because she could not care for herself. Since the payments received are not actually for medical expenses W much include them in taxable income.

 True

 False

F owns a rental house which is rented to P. During Year 4 P paints the house in lieu of paying rent for two months of $1,000. F does not have to include the $1,000 in rental income.

 True

 False

F owns a rental house which is rented to P. At the end of Year 2, P prepays $2,000 rent for the first four months of Year 3. F reports income on the accrual basis. F can report the $2,000 as income in Year 3.

 True

 False

Tax methods of accounting, once selected, cannot be changed without permission of the Internal Revenue Service.

 True

 False

Regular C corporations must always use the accrual method accounting.

 True

 False

R, an accrual basis taxpayer, was paid $5,000 as an advance payment of goods in Year 1. The goods will not be delivered until Year 2. For financial reporting purposes, the $5,000 will be recognized in Year 1. R may defer recognition of the income for tax purposes until Year 2.

 True

 False

S, an accrual basis taxpayer, was paid $1,000 in Year 1 for some services that will not be performed until Year 2. S may elect to defer recognition of the income until Year 2.

 True

 False

Taxpayers on the cash basis do not have any basis in their accounts receivables since income is not recognized until received.

 True

 False