Question

- Esterina redeemed EE bonds which qualify for the educational exclusion. The redemption consisted of $12,000 principal and $4,000 interest. The net qualifying educational expenses are $10,000. Her AGI is below the threshold for phase-out of the exclusion. The taxable interest is

A) $0.

B) $1,500.

C) $2,400.

D) $3,000.

- In December 2018, Tatiana, a cash-basis taxpayer, rents an apartment to Hakeem. Tatiana receives both the first and last months' rent totaling $2,000 plus a security deposit of $500. The amount of income reported by Max as taxable in 2018 is

A) $400.

B) $1,000.

C) $2,000.

D) $2,500.

- Jamal owns 1,500 shares of Green Corporation. This year, Green declared a 5% stock dividend. There was no option for shareholders to receive cash. When Jamal received 75 shares of Green stock, it had a fair market value of $60 a share. How much income does Jamal have from the dividend?

A) $0

B) $50

C) $5,000

D) $50,000

- A couple was divorced in 2016, resulting in the payment of alimony. Alimony paid in 2018 is

A) included in income by the payor and deducted by the payee.

B) an item which does not affect the payor's or the payee's tax reporting.

C) deductible by both the payor and the payee.

D) deductible by the payor and included in income by the payee.

- Francisco purchased an annuity for $60,000 that will pay him $1,000 per month for ten years. What amount should Francisco include in his income each year?

A) $0

B) $6,000

C) $10,000

D) $12,000

Answer 1

1.(b 1500)interest 4000,education expenses 10000,principle 12000.

Calculation as:4000*(10000/16000(p+I))

4000*0.625=2500.

4000-2500=1500.

2. (C 2000) a security deposit is not a taxable until final deposition.it is not a taxable unless non refundable or until the tenant moved out and all or part of the deposit is not returned to the tenant .rent is taxable when is received.

4. Deductible by the payor and included in income by the payee( explanation :- according to definition of the gross income for AGI deductions for alimony is paid by the payor

( note: I have little confusion in 3 and 5 answer and time limit also less thats why I cant give 3 and 5 no. Question)