Exam 3: Determining Gross Income

When is a taxpayer required to annualize income for a short tax year?

_____ 22. Income of a nonresident alien cannot be taxed by the United States.

Billy's father owns a controlling interest in Big Top Corporation. Billy needed $20,000 to pay a gambling debt and the corporation made a loan to Billy at no interest for the $20,000. This transaction can be characterized as:

Put T for Taxable income or N for Nontaxable income beside each item below as it normally would be treated for tax purposes. -_____ o. Child support received

Put T for Taxable income or N for Nontaxable income beside each item below as it normally would be treated for tax purposes. -_____ a. Income earned in year 2 of a four-year long-term contract using the completed contract method.

Which of the following types of income would a nonresident alien avoid paying tax on in the U.S.?

_____ 5. All taxpayers may use the accrual method of determining income but certain taxpayers may not use the cash method.

_____ 21. Under the source principle of international taxation, income will be taxed in a particular jurisdiction if the source of that income is a business operating in that jurisdiction.

To whom do the doctrines of constructive receipt and claim of right apply?

____ 20. The basis in inherited property is normally determined at the decedent's date of death.

Clayton Corporation receives $100,000 to provide garbage service for the next four years:

Put T for Taxable income or N for Nontaxable income beside each item below as it normally would be treated for tax purposes. -_____ k. Alimony received