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Federal Taxation
Quiz 4: Gross Income: Concepts and Inclusions
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Question 61
Multiple Choice
On January 5, 2018, Tim purchased a bond paying interest at 6% for $30,000. On March 31, 2018, he gave the bond to Jane. The bond pays $1,800 interest on December 31. Tim and Jane are cash basis taxpayers. When Jane collects the interest in December 2018:
Question 62
Multiple Choice
Office Palace, Inc., leased an all-in-one printer to a new customer, Ashley, on December 27, 2018. The printer was to rent for $600 per month for a period of 36 months beginning January 1, 2019. Ashley was required to pay the first and last month's rent at the time the lease was signed. Ashley was also required to pay a $1,500 damage deposit. Office Palace must recognize as income for the lease:
Question 63
Multiple Choice
Under the alimony rules:
Question 64
Multiple Choice
With respect to income from services, which of the following is true?
Question 65
Multiple Choice
With respect to the prepaid income from services, which of the following is true?
Question 66
Multiple Choice
As a general rule: I. Income from property is taxed to the person who owns the property. II) Income from services is taxed to the person who earns the income. III) The assignee of income from property must pay tax on the income. IV) The person who receives the benefit of the income must pay the tax on the income.
Question 67
Multiple Choice
Which of the following is not a requirement for an alimony deduction?
Question 68
Multiple Choice
The Maroon & Orange Gym, Inc., uses the accrual method of accounting. The corporation sells memberships that entitle the member to use the facilities at any time. A one-year membership costs $480 $480/12 = $40 per month) ; a two-year membership costs $720 $720/24 = $30 per month) . Cash payment is required at the beginning of the membership period. On July 1, 2018, the company sold a one-year membership and a two-year membership. For financial reporting purposes, Maroon reports the membership income ratably over the number of months involved. The company should report as gross income from the two contracts:
Question 69
Multiple Choice
Daniel purchased a bond on July 1, 2018, at par of $10,000 plus accrued interest of $300. On December 31, 2018, Daniel collected the $600 interest for the year. On January 1, 2019, Daniel sold the bond for $10,200.