Question 1

In some community property states,the income from property that was inherited by a spouse after the marriage is treated as all earned by the spouse who inherited the property.

Accepted Answer

A) True 
 B)False

Question 2

Jacob and Emily were co-owners of a personal residence.As part of their divorce agreement,Emily received sole ownership of their personal residence.This property transfer is classified as a property settlement rather than as alimony as the transfer was a result of a divorce.

Accepted Answer

A) True 
 B)False

Question 3

The Blue Utilities Company paid Sue $2,000 for the right to lay an underground electric cable across her property anytime in the future.

Accepted Answer

A)   Sue must recognize $2,000 gross income in the current year if the company did not install the cable during the year.
B)   Sue is not required to recognize gross income from the receipt of the funds, but she must reduce her cost basis in the land by $2,000.
C)   Sue must recognize $2,000 gross income in the current year regardless of whether the company installed the cable during the year.
D)   Sue must recognize $2,000 gross income in the current year, and when the cable is installed, she must reduce her cost basis in the land by $2,000.
E)   None of the above.F) D) and E)
G) B) and E)

Question 4

Margaret made a $90,000 interest-free loan to her son,Adam,who used the money to retire a mortgage on his personal residence and to buy a certificate of deposit.Adam's only income for the year is his salary of $35,000 and $1,400 interest income on the certificate of deposit.The relevant Federal interest rate is 8% compounded semiannually.The loan is outstanding for the entire year.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> (.08 ´ $105,000 ´ 1...

Question 5

Tim and Janet were divorced.Their only marital property was a personal residence with a value of $120,000 and cost of $50,000.Under the terms of the divorce agreement,Janet would receive the house and Janet would pay Tim $15,000 each year for 5 years,or until Tim's death,whichever should occur first.Tim and Janet lived apart when the payments were made to Tim.The divorce agreement did not contain the word "alimony."

Accepted Answer

A)   Tim must recognize a $35,000 [$60,000 - 1/2($50,000) ] gain on the sale of his interest in the house.
B)   Tim does not recognize any income from the above transactions.
C)   Janet is not allowed any alimony deductions.
D)   Janet is allowed to deduct $15,000 each year for alimony paid.
E)   None of the above.F) A) and C)
G) A) and E)

Exam 4: Gross Income: Concepts and Inclusions

The Blue Utilities Company paid Sue $2,000 for the right to lay an underground electric cable across her property anytime in the future.

Correct Answer
verified

Correct Answer
verified
(.08 ´ $105,000 ´ 1...
View Answer

Jacob and Emily were co-owners of a personal residence.As part of their divorce agreement,Emily received sole ownership of their personal residence.This property transfer is classified as a property settlement rather than as alimony as the transfer was a result of a divorce.

Correct Answer
verified

In some community property states,the income from property that was inherited by a spouse after the marriage is treated as all earned by the spouse who inherited the property.

Correct Answer
verified

Correct Answer
verified

Exam 4: Gross Income: Concepts and Inclusions

The Blue Utilities Company paid Sue $2,000 for the right to lay an underground electric cable across her property anytime in the future.

Correct AnswerverifiedShow Answer

Correct Answerverified (.08 ´ $105,000 ´ 1...View AnswerShow Answer

Jacob and Emily were co-owners of a personal residence.As part of their divorce agreement,Emily received sole ownership of their personal residence.This property transfer is classified as a property settlement rather than as alimony as the transfer was a result of a divorce.

Correct AnswerverifiedShow Answer

In some community property states,the income from property that was inherited by a spouse after the marriage is treated as all earned by the spouse who inherited the property.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
(.08 ´ $105,000 ´ 1...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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