Gleim 4 Flashcards
Rental income
Rental income is included in gross income unless the residence is rented out for less than 15 days a year.
Because the taxpayer rented his home for only 10 days, the net rental income is excluded from gross income.
Foreclosure of land , bank sells land as settlement debt. What income should the debtor recognize?
In addition to gains from the sale of property, gross income includes discharge (cancellation) of indebtedness when a debt is canceled in whole or part for consideration.
The income is the difference between the liability relief of $45,000 and the adjusted basis in the land of $20,000.
If you owe someone a debt amount of 10k, and 5k gets relieved. Do you have income for that 5k relieved?
Yes, you need to recognize 5,000 of it as income, when the loaner cancels the debt.
Pre 2019 divorces - alimony example regarding third party
Regarding pre-2019 divorces, payments of cash to a third party made at the written request of the payee spouse will qualify as alimony. Payments are often made on behalf of the payee spouse, such as payments for mortgages, rent, medical costs, or education.
Lump sum alimony would be included also, unless the divorce decree says its not deductible
State income refund of $900, plus interest of $10 for overpayment of state income tax. What is taxable in the following year?
$10 only ; refund is not taxable
Interest income examples that is taxable on joint income tax return.
500 on interest on federal income tax refund
600 interest on state income tax refund
800 interest on federal government obligations
Excluded 1000 interest on state government obligations ( municipal bonds)
Divorce in 2022, after 2018. What is included in individuals’ gross income?
Regardless of the requirements to qualify as alimony, for divorces executed after 2018, maintenance and separation payments to a former spouse are not deductible by the payor or income to the payee. Therefore, the individual receiving the payments would not include any in gross income. An individual received $50,000 during the current year pursuant to a divorce decree effective in 2022. A check for $25,000 was identified as annual alimony, checks totaling $10,000 were identified as annual child support, and a check for $15,000 was identified as a property settlement. What amount should be included in the individual’s gross income?
Unemployment compensation included in gross income?
Yes, under both federal and state plans
Awards allows deduction of up to 400 per award (or upto 1,600 under a QUALIFED EMPLOYMENT PLAN)
Bike at cost of $1,200 ; does not consider FMV of $1,600
Interest income examples on 2022 tax return
Interest on 400 refund of federal income tax for 2021
interest of 300 on award for personal injuries sustained in accident in 2021
interest on 1000 on unite states savings bonds (HH series ; not EE series)
interest on 30 state income tax refund
Interest on 3,000 US Treasury Certificates
NOT 1,500 municipal bonds
NOT veterans administrative insurance dividends left on deposit
NOT EE BONDS
Taxpayers AGI included
excluded Workers compensation 30,000
excluded loss on sale of residence 75,000
excluded inheritance
excluded proceeds of a lawsuit for physical injuiries
INCLUDED damages received for slander 40,000
INCLUDED w-2 wages 80,000
Proceeds under a life insurance contract paid by reason of death of the insured are
Proceeds under a life insurance contract paid by reason of death of the insured are excluded from gross income. But the amount of each payment in excess of the death benefit prorated over the period of payment ($75,000 ÷ 15 years = $5,000 per year) is interest income ($6,000 – $5,000), which is included in gross income.
