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tax-For each of the following, determine the amount that should be included in gross income:




Question;53. For each of the following, determine the amount that should be included in gross income:a. Peyton was selected the most valuable player in the Super Bowl. In recognition of this, he was awarded an automobile with a value of $60,000. Peyton did not need the automobile, so he asked that the title be put in his parents? names.b. Jacob was awarded the Nobel Peace Prize. When he was presented the check for $1.4 million, Jacob said, ?I do not need the money. Give it to the United Nations to use toward the goal of world peace.?c. Linda won the Craig County Fair beauty pageant. She received a $10,000 scholarship that paid her $6,000 for tuition and $4,000 for meals and housing for the academic year.54. LO.4 The LMN Partnership has a group term life insurance plan. Each partner has $150,000 of protection, and each employee has protection equal to twice his or her annual salary. Employee Alice (age 32) has $90,000 of insurance under the plan, and partnerKay (age 47) has $150,000 of coverage. Because the plan is a ?group plan,? it is impossible to determine the cost of coverage for an individual employee or partner.a. Assuming that the plan is nondiscriminatory, how much must Alice and Kay each include in gross income as a result of the partnership paying the insurance premiums?b. Assume that the partnership is incorporated. Kay becomes a shareholder and an employee who receives a $75,000 annual salary. The corporation provides Kay with $150,000 of group term life insurance coverage under a nondiscriminatory plan.What is Kay?s gross income as a result of the corporation paying the insurance premiums?55. LO.2, 4 Herbert was employed for the first six months of 2013 and earned $90,000 in salary. During the next six months, he collected $8,800 of unemployment compensation, borrowed $12,000 (using his personal residence as collateral), and withdrew $2,000 from his savings account (including $60 of interest). He received dividends of $550. His luck was not all bad, for in December, he won $1,500 in the lottery on a $5 ticket. CalculateHerbert?s gross income.56. LO.4, 5 Linda and Don are married and file a joint return. In 2013, they received $12,000 in Social Security benefits and $35,000 in taxable pension benefits and interest.a. Compute the couple?s adjusted gross income on a joint return.b. Don would like to know whether they should sell for $100,000 (at no gain or loss) a corporate bond that pays 8% in interest each year and use the proceeds to buy a $100,000 nontaxable State of Virginia bond that will pay $6,000 in interest each year.c. If Linda in (a) works part-time and earns $30,000, how much will Linda and Don?s adjusted gross income increase?57. LO.4 Melissa, who is 70 years old, is unmarried and has no dependents. Her annual income consists of a taxable pension of $17,000, $14,000 in Social Security benefits, and $3,000 of dividend income. She does not itemize her deductions. She is in the 15% marginal income tax bracket. She is considering getting a part-time job that would pay her $5,000 a year.a. What would be Melissa?s after-tax income from the part-time job, considering SocialSecurity and Medicare tax (7.65%) as well as Federal income tax on the earnings of $5,000?b. What would be the effective tax rate (increase in tax/increase in income) on the additional income from the part-time job?58. LO.3, 4 Donna does not think she has an income tax problem but would like to discuss her situation with you just to make sure she will not get hit with an unexpected tax liability. Base your suggestions on the following relevant financial information:a. Donna?s share of the SAT Partnership income is $150,000, but none of the income can be distributed because the partnership needs the cash for operations.b. Donna?s Social Security benefits totaled $8,400, but Donna loaned the cash received to her nephew.c. Donna assigned to a creditor the right to collect $1,200 of interest on some bonds she owned.d. Donna and her husband lived together in California until September, when they separated.Donna has heard rumors that her husband has had substantial gambling winnings since they separated.


Paper#41288 | Written in 18-Jul-2015

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