Connect ACCT 401 Chapter 5 Assignment - Spring B 2015 1 Taxation I & II
Chapter 5
1.
Problem 5-55 (LO 5-2)
For each of the following independent situations, indicate the amount the taxpayer must include in gross income: |
a. |
Phil won $790 in the scratch-off state lottery. There is no state income tax. |
Amount to be included |
$ |
b. |
Ted won a compact car worth $18,700 in a TV game show. Ted plans to sell the car next year. |
Amount to be included |
$ |
c. |
Al Bore won the Nobel Peace Prize of $585,000 this year. Rather than take the prize, Al designated that the entire award should go to Weatherhead Charity, a tax-exempt organization. |
Amount to be included |
$ |
d. |
Jerry was awarded $5,500 from his employer, Acme Toons, when he was selected most handsome employee for Valentine’s Day this year. |
Amount to be included |
$ |
e. |
Ellen won a $1,950 cash prize in a school essay contest. The school is a tax-exempt entity, and Ellen plans to use the funds to pay her college education. |
Amount to be included |
$ |
f. |
Gene won $760 in the office March Madness pool. |
Amount to be included |
$ |
Explanation:
a.
All $790 is economic income realized this year and is, therefore, included in gross income. |
b.
The value of the car, $18,700, is economic income realized this year and is, therefore, included in gross income. |
c.
The entire award is excluded and therefore tax exempt. The award is excluded because it was for scientific, literary, or charitable achievement, and the taxpayer immediately transferred the award to a qualified charity. |
d.
All $5,500 is economic income realized this year and is, therefore, included in gross income. |
e.
All $1,950 is economic income realized this year and is, therefore, included in gross income. |
f.
Gene should include $760 in his gross income. |
2.
Problem 5-72 (LO 5-3)
Dontae’s employer has offered him the following employment package. |
|
|
Salary |
$ 450,000 |
Health insurance |
15,500 |
Dental insurance |
1,050 |
Membership to Heflin Country Club |
17,000 |
Season tickets to Atlanta Braves games |
5,100 |
Tuition reimbursement for graduate courses |
4,150 |
Housing allowance (for
a McMansion in his |
37,000 |
|
What is Dontae’s gross income from his employment? |
Gross income |
$ |
3.
Problem 5-63 (LO 5-3)
For each of the following situations, indicate how much the taxpayer is required to include in gross income: |
a. |
Steve was awarded a $9,200 scholarship to attend State Law School. The scholarship pays Steve's tuition and fees. |
|
|
b. |
Hal was awarded a $19,400 scholarship to attend State Hotel School. All scholarship students must work 40 hours per week at the School residency during the term. |
|
|
c. |
Bill was the recipient of an athletic scholarship that pays his $20,200 tuition to State University and provides him with a $840 per month stipend to pay for food and housing. The scholarship requires Bill to participate in athletic competition each term. |
a. |
How much of scholarship is Steve required to include in his gross income? |
Amount to be included |
$ |
b. |
What is the amount of scholarship Hal should include in his gross income? |
Amount to be included |
$ |
c. |
How much of scholarship and stipend (for 12 months) are to be included in Bill's gross income? |
|
$ |
Amount of stipend to be included |
$ |
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Rating:
5/
Solution: Connect ACCT 401 Chapter 5 Assignment - Spring B 2015 1 Taxation I & II