· Question 1
2 out of 2 points
The Royal Motor Company manufactures automobiles. Employees of the company can buy a new automobile for Royals cost plus 2%. The automobiles are sold to dealers at cost plus 20%. Generally, employees of Local Dealer, Inc., are allowed to buy a new automobile from the company at the dealers cost. Officers of Local Dealer are allowed to use a company vehicle (for personal use) at no cost.
· Question 2
2 out of 2 points
Peggy is an executive for the Tan Furniture Manufacturing Company. Peggy purchased furniture from the company for $9,500, the price Tan ordinarily would charge a wholesaler for the same items. The retail price of the furniture was $12,500, and Tans cost was $9,000. The company also paid for Peggys parking space in a garage near the office. The parking fee was $600 for the year. All employees are allowed to buy furniture at a discounted price comparable to that charged to Peggy. However, the company does not pay other employees parking fees. Peggys gross income from the above is:
· Question 3
0 out of 2 points
The de minimis fringe benefit:
· Question 4
2 out of 2 points
Hazel, a solvent individual but a recovering alcoholic, embezzled $6,000 from her employer. In the same year that she embezzled the funds, her employer discovered the theft. Her employer did not fire her and told her she did not have to repay the $6,000 if she would attend Alcoholics Anonymous. Hazel met the conditions and her employer canceled the debt.
· Question 5
2 out of 2 points
Melody works for a company with only 22 employees. Her employer contributed $2,000 to her health savings account (HSA), and the account earned $100 in interest during the year. Melody withdrew only $1,200 to pay medical expenses during the year. Melody is not required to recognize any gross income from the HSA for the year.
· Question 6
2 out of 2 points
The earnings from a qualified state tuition program account are deferred from taxation until they are used for qualified higher education expenses. At that time, the amount taken from the fund must be included in the gross income of the person who contributed to the account.
· Question 7
2 out of 2 points
The Perfection Tax Service gives employees $12.50 as supper money when they are required to work overtime, approximately 25 days each year. The supper money received:
· Question 8
2 out of 2 points
Ron, age 19, is a full-time graduate student at City University. During 2013, he received the following payments:
Cash award for being the outstanding resident adviser
$ 1,500
Resident adviser housing
2,500
State scholarship for ten months (tuition and books)
6,000
State scholarship (meals allowance)
2,400
Loan from college financial aid office
3,000
Cash support from parents
2,000
$17,400
Ron served as a resident advisor in a dormitory and, therefore, the university waived the $2,500 charge for the room he occupied. What is Rons adjusted gross income for 2013?
· Question 9
2 out of 2 points
Brooke works part-time as a waitress in a restaurant. For groups of 7 or more customers, the customer is charged 15% of the bill for Brookes services. For parties of less than 7, the tips are voluntary. Brooke received $11,000 from the groups of 7 or more and $7,000 in voluntary tips from all other customers. Using the customary 15% rate, her voluntary tips would have been only $6,000. Brooke must include $18,000 ($11,000 + $7,000) in gross income.
· Question 10
2 out of 2 points
Sarahs employer pays the hospitalization insurance premiums for a policy that covers all employees and retired former employees. After Sarah retires, the hospital insurance premiums paid for her by her employer can be excluded from her gross income.