Question 1

José,a cash method taxpayer,is a partner in J&T Accounting Services,a calendar year partnership.Under the partnership agreement,José is to receive 20% of the partnership's profits or losses.Each partner is allowed to withdraw $12,000 each month for his or her living expenses.José withdrew $144,000 during the year as his monthly draw in 2010.In February of each year,the partnership computes its net profit and decides how much should be retained in the business.The balance of the earnings is distributed to the partners in early March.In March 2010,José received $20,000 as a distribution of 2009 profits,and in March 2011,José received $30,000 as his share of distributed 2010 profits.The partnership earnings before partners' withdrawals for 2010 totaled $900,000.Compute José's gross income from the partnership for 2010.

Accepted Answer

José's gross income from the partnership...

Question 2

If the taxpayer's method of measuring income is consistent with GAAP,it will be acceptable for tax purposes.

Accepted Answer

A) True 
 B)False

Question 3

Under the terms of a divorce agreement,Lanny was to pay his wife Joyce $2,500 per month in alimony and $500 per month in child support.For a twelve-month period,Lanny can deduct from gross income (and Joyce must include in gross income) :

Accepted Answer

A)  $0.
B)  $6,000.
C)  $30,000.
D)  $36,000.
E)  None of the above.F) A) and B)
G) D) and E)

Question 4

Samantha and her son,Brent,are cash basis taxpayers.Samantha gave Brent a corporate bond with a face amount and fair market value of $10,000.On the date of the gift,September 30,2010,the accrued interest on the bond was $150.On December 31,2010,Brent collected $300 interest on the bond.Samantha is taxed on the $150 accrued interest,and Brent must include in gross income the $150 interest earned after the date of the gift.

Accepted Answer

A) True 
 B)False

Question 5

Turner,a successful executive,is negotiating a compensation plan with his potential employer.The employer has offered to pay Turner a $720,000 annual salary,payable at the rate of $60,000 per month.Turner counteroffers to receive a monthly salary of $50,000 ($600,000 annually) and a $180,000 bonus in 5 years when Turner will be age 65.

Accepted Answer

A)  If the employer accepts Turner's counteroffer,Turner will recognize $65,000 ($780,000  ÷\div÷   12) each month.
B)  If the employer accepts Turner's counteroffer,Turner will be in constructive receipt of $60,000 per month.
C)  If the employer accepts Turner's counteroffer,Turner will be in constructive receipt of $60,000 per month and the $180,000 bonus.
D)  If the employer accepts Turner's counteroffer,Turner will recognize as gross income $50,000 per month and $180,000 in year 5.
E)  None of the above. F) None of the above
G) C) and D)

Exam 4: Gross Income: Concepts and Inclusions

Correct Answer
verified

If the taxpayer's method of measuring income is consistent with GAAP,it will be acceptable for tax purposes.

Correct Answer
verified

Under the terms of a divorce agreement,Lanny was to pay his wife Joyce $2,500 per month in alimony and $500 per month in child support.For a twelve-month period,Lanny can deduct from gross income (and Joyce must include in gross income) :

Correct Answer
verified

Correct Answer
verified
José's gross income from the partnership...
View Answer

Correct Answer
verified

Exam 4: Gross Income: Concepts and Inclusions

Correct AnswerverifiedShow Answer

If the taxpayer's method of measuring income is consistent with GAAP,it will be acceptable for tax purposes.

Correct AnswerverifiedShow Answer

Under the terms of a divorce agreement,Lanny was to pay his wife Joyce $2,500 per month in alimony and $500 per month in child support.For a twelve-month period,Lanny can deduct from gross income (and Joyce must include in gross income) :

Correct AnswerverifiedShow Answer

Correct AnswerverifiedJosé's gross income from the partnership...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
José's gross income from the partnership...
View Answer

Correct Answer
verified