(SOLVED) Hank carries a 100 000 insurance policy on his

life Premiums
Hank carries a $100,000 insurance policy on his life. Premiums paid over the years total $8,000.
Dividends on the policy have totaled $6,000. Hank has left the dividends on the policy with the
insurance company. During the current year, the insurance company credited $600 of interest
on the accumulated dividends […]

Ed is the beneficiary of a $20,000 insurance policy on the life of his mother. Because Ed needs
funds, he sells the policy to his sister, Amy, for $6,000. Amy subsequently pays premiums of
$9,000. a. How much income must Amy report if she collects the face value of the […]

Don is the beneficiary of a $50,000 insurance policy on the life of his mother, Anna. To date,
Anna has paid premiums of $16,000. What amount of gross income must be reported in each of
the following cases? a. Anna elects to cancel the policy and receives $20,000, the cash […]

Which of the following would be includable in gross income? a. Alice appeared on a TV quiz
show and received a prize of $5,000. b. Bart received $500 from his employer because he
developed an idea that reduced the employer’s production costs. c. Chuck borrowed $500 from
his mother in […]

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In which of the following situations would the taxpayer realize taxable income? a. A mechanic
performs work on his own automobile. The mechanic would have charged a customer $400 for
doing the same work. b. A mechanic repairs his neighbor’s personal automobile. In exchange,
the neighbor, an accountant, agrees to […]

Luke, who retired this year, lives in a four-plex owned by Julie. Luke’s income decreased when
he retired, and he now has difficulty paying his rent. Julie offered to reduce Luke’s rent if he
would agree to mow the lawn, wash windows, and provide other maintenance services. Luke
accepted, and […]

Both high-income and low-income employees are covered by cafeteria plans. Under such plans,
all employees may select from a list of nontaxable fringe benefits or they may elect to receive
cash in lieu of these benefits. a. Which group of employees is more likely to choose nontaxable
fringe benefits in […]

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