income tax concepts unit 2
Using your text, complete the following. In these problems, apply your knowledge of the inclusions and exclusions recorded for tax purposes on income tax forms.
· Problem 34, on page 3-35.
· Problem 38, on page 3-36.
· Problem 39, on page 3-37.
· Problem 41, on page 3-37.
· Problem 43, on page 3-37.
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34. In 2014 Marie borrowed $10,000. In 2019 the debt was forgiven. Marie does not believe she should report the forgiveness of debt as income because she received nothing at the time the debt was forgiven in 2019. Do you agree or disagree? Support your position. |
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38. Determine the amount of tax liability in the following situations. In all cases, the taxpayer is using the filing status of married filing jointly. a. Taxable income of $62,449 that includes a qualified dividend of $560. b. Taxable income of $12,932 that includes a qualified dividend of $322. c. Taxable income of $144,290 that includes a qualified dividend of $4,384. d. Taxable income of $43,297 that includes a qualified dividend of $971. e. Taxable income of $262,403 that includes a qualified dividend of $12,396. |
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39. Each of the following taxpayers received a state income tax refund in 2019. In all cases, the taxpayer has a filing status of married filing jointly. What amount of the refund is properly included in 2019 income? a. Refund of $729; taxpayer did not itemize deductions in 2018. b. Refund of $591; taxpayer had $25,391 of itemized deductions in 2018. c. Refund of $927; taxpayer had itemized deductions of $24,300 in 2018. |
41. Carl and Karina file a joint return. Karina earned a salary of $38,000 and received dividends of $3,000, taxable interest income of $2,000, and nontaxable interest of $1,000. Carl received $9,000 of social security benefits and a gift of $6,000 from his brother. What amount of social security benefits is taxable to Carl and Karina?
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43.Burger Store is located near many large office buildings, so at lunch it is extremely busy. Burger Store management previously permitted lunchtime employees a half-hour off-premises lunch break. However, employees could not easily return in a timely manner. Thus, a new policy was instituted to allow employees a 20-minute break for free lunch (only on the Burger Store premises). The company’s accountant believes that the cost of these meals must be allocated to employees as additional compensation because the meals do not qualify as a nontaxable fringe benefit for employee discounts. In your opinion, should the cost of these meals be taxable or tax-free to employees? Support your answer. |