Question

___25. Roger died and in his will he bequeathed all of his property to his daughter, Sara. The property was worth $200,000 at Roger’s death. For federal income tax purposes, Sara should:

1. include $200,000 in her gross income

2. deduct $200,000 from AGI, subject to a 10% floor

3. include $187,000 in her gross income

4. exclude $200,000 from her gross income

5. deduct $200,000 for AGI

__26. Once a month, Arthur called his mother long distance from his telephone at the office. His employer permits employees to make occasional personal calls and does not require employees to reimburse the cost of such calls. If Arthur paid for the calls last year, they would have cost $22. For federal income tax purposes Arthur should:

a. exclude $22 from gross income as part of the cafeteria plan

b. include $22 in gross income

c. deduct $22 from AGI

d. exclude $22 as a de minimus fringe

e. include $18 in gross income

__27. Which of the following are deductions for AGI:

a. trade or business expenses

b. property taxes on a personal residence

c. charitable contributions

d. fines and penalties incurred in a trade or business

e. none of the above

28. Personal use property may be:

a. intangible

b. tangible

c. real property

d. personal property

e. all of the above

Answer 1

25) option A because on  transfer of property capital gains will be calculated so $200000 has to be included in Sara's gross income.

All other options are irrelevant.

26) option D because according to IRS de minimus fringe benefit is one which is so small & infrequent that is accounting is impractical. In given case Arthur calls his mom once a month which is infrequent & amount is also very small

All other options are not relevant.

27) option C ie charitable contribution. Taxpayers can get upto 60% or 100% deduction of charitable contribution from AGI.

All other options are irrelevant

28) option E ie all of the above.