Chapter 2 - Income and Farms

Question 1

What constitutes as Gross Income?

Answer 1

1) Compensation for services, including fees, commissions, and fringe benefits

2) Gross Income derived from business

3) Gains derived from dealings in property

4) Interest

5) Rents

6) Royalties

7) Dividends

8) Annuities

9)Income from life insurance and endowment contracts

10) Pensions

11) Income from discharge of indebtedness

12) Distributive share of partnership gross income

13 IRD ( income earned but not received before death )

14) Income from an interest in an estate or trust

Question 2

What is included as Self Employed Income

Answer 2

1) Net Income from a trade or business

2) General distributive share of the OI or loss of a partnership

3) Guaranteed payments for services from a partnership

4) Corporate directors’s fees

5) Payments for lost earnings

Question 3

Farm Optional Method

Answer 3

1) TP may use this method to figure net earnings from farm self employment if gross farm income was 9060 or net farm profits were less 6540

Question 4

what is the figure farm net earnings

Answer 4

Question 5

What is GI from farming activites

Answer 5

1) Income from farming - amounts received from cultivating the soil or raising or harvesting agricultural commodities.

2) Gains from the sale of livestock - amounts received for livestock raised on the farm or purchased for resale. The basis of livestock is generally the cost of the animals

3) Income report on Sch F

Question 6

FICA Tax for SE

Answer 6