Purchase Solution

Gross income, constructive receipt of income, claimed income

Not what you're looking for?

Ask Custom Question

1. Which of the following does not have to be included in gross income?
I. Lottery winnings
II. Damages from personal injury suit involving back injuries
III. Prize from church raffle

A. I only
B. II only
C. III only
D. I and II only
E. I, II, and III

2. Which of the following is not considered actual receipt or "constructive receipt" of income in the current year?

A. Taxpayer A was informed his check for services rendered was available on December 15 of the current year, but he waited until January 15 of the following year to pick up the check.
B. A payment on a sale of real property was placed in escrow on December 15 of the current year but not received by Taxpayer A until January 10 of the following year, when the transaction was closed.
C. Earned income of Taxpayer A was received by his agent on December 29 of the current year but not received by A until January 5 of the following year.
D. Taxpayer B received a check on December 30 of the current year for services rendered but was unable to make a deposit until January 4 of the following year.

3. During the previous year, Carrie paid $500 of estimated state income tax payments which she also deducted for federal income tax purposes. Early in the current year, Carrie received a refund of $300 of these state tax payments. Carrie immediately placed an illegal bet at 5-to-1 odds and won an additional $1,500. Later in the year, Carrie was short of money and robbed a tavern of $4,000. How much should Carrie include in her income for the current year?

A. $0
B. $1,500
C. $1,800
D. $5,800

Purchase this Solution
Solution Summary

Your tutorial gives you the reasons and three references for further explanation of the recommended selection. Taxable income rules are explained.

Solution Preview

1. Which of the following does not have to be included in gross income?

I. Lottery winnings
II. Damages from personal injury suit involving back injuries
III. Prize from church raffle

A. I only
B. II only
C. III only
D. I and II only
E. I, II, and III

B. As you can see from the citation below, lottery and prizes are specifically included. The damages from an injury suit are non-taxable but if you itemized deduction for the back injuries you may have some income. We'll ignore this nuisance for this question.
http://www.irs.gov/pub/irs-pdf/p4345.pdf
http://www.irs.gov/instructions/iw2g/ar02.html

2. Which of the following is ...

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
Recent Feedback
  • "hey just wanted to know if you used 0% for the risk free rate and if you didn't if you could adjust it please and thank you "
  • "Thank, this is more clear to me now."
  • "Awesome job! "
  • "ty"
  • "Great Analysis, thank you so much"
Purchase this Solution
Free BrainMass Quizzes
Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.

Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.

MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.

Social Media: Pinterest

This quiz introduces basic concepts of Pinterest social media

View More Free Quizzes
Related BrainMass Solutions

  • Various Taxation Questions

    Gross Income - Constructive receipt (Treas. Reg. § 1.451-2(a).) d. Interest of $800 credited to his savings account, added to Bill's account balance. Gross Income - Constructive receipt (Treas. Reg. § 1.451-2(a).) e.

  • Discuss exemptions, constructive receipt, for/from AGI, Tax

    of DEPENDENCY EXEMPTION as it applies to the income tax of individuals 2.- discuss the concept of CONSTRUCTIVE RECEIPT as it applies to the income tax of individuals 3.- for individual tax purposes, what is the distinction between deduction FOR adjusted

  • Constructive Receipt Argument

    http://taxes.about.com/od/backtaxes/qt/statute_limits.htm The position of the IRS in this type of problem is that the taxpayer did not have constructive receipt of income in 1985.

  • Section 61 of the IRS Code

    Recognized income 3. Return of capital doctrine 4. Constructive receipt 5. Tax benefit rule 6.

  • Taxable Income Ruling: Doctrine of Constructive Receipt

    158761 Taxable Income Ruling: doctrine of constructive receipt Introduction: Walter used the cash method to account for income from his cattle ranch.

  • Taxpayer A sells a parcel of undeveloped real property to B

    The taxpayer recognizes the income under constructive receipt. Constructive receipt takes place when the taxpayer can actually use the money received -- the income gained from the sale.

  • Constructively Received Income

    None of above I & II are both received under constructive receipt. III is not received under constructive receipt because the employee does not have access to the wages without limitation.

  • Taxation: Income in respect of a decendent (IRD) for Joyce Ingal

    decedent's final return), which is usually the receipt of the income by the beneficiary (www.nysscpa.org).

  • What Constitutes Income?

    The Economic Benefit Doctrine, Constructive Receipt Doctrine, and Assignment of Income Doctrine help set the lines of demarcation between what constitutes income, when it must be recognized, and who must pay taxes on it.

View More Related Solutions