Income

Question 1

Group Term Life Insurace

Answer 1

1. First 50,000 tax free
2. Remaining / $1,000 = Units
3. Units * Uniform Cost = Includable

Question 2

Installment Sale Gain

Answer 2

180,000 Gain / 600,000 Price = 30% GP
30% GP * 120,000 Installment = 36,000 Recognized Gain

120,000 Installment / 600,000 Price = 20%
20% * 180,000 Gain = 36,000 recognized gain

Question 3

Netting Priority

Answer 3

Short-Term Loss netted with short term gain
Short term loss - 28% long term capital gain
Remaining - 25% capital gain
Remaining - 15% long term gain

Question 4

Reportable Annuity Income

Answer 4

Return = Months * Income Per Month
Exclusion Ratio = Basis / Return
Exclusion = Payments for Year * Exclusion Ratio
Reportable = Payments for Year - Exclusion

Question 5

Life Insurance Taxable Interest

Answer 5

Years * Months = Periods
Proceeds / Periods = Payment per period
Months remaining in year * payment = excludable
Includable = Payment for year - excludable

Question 6

Early Withdrawal

Answer 6

(Withdrawal amount * tax rate) + (withdrawal amount * 10% penalty)

Question 7

SSB

Answer 7

SSB - (.85 * SSB) = Excluded