Question 1

An individual buys 200 shares of General Electric Corporation stock.In lieu of receiving quarterly dividends,the individual signs an agreement to have dividends reinvested by GE into additional shares of stock.The individual does not receive dividend checks so he need not recognize the quarterly dividends for tax purposes.

Accepted Answer

A) True 
 B)False

Question 2

Property settlements made incident to a divorce have no immediate tax consequences; that is,the transfer from one spouse to another is not taxable.

Accepted Answer

A) True 
 B)False

Question 3

Frasier and Marcella,husband and wife,file separate returns.Frasier and Marcella live in a community property state that considers separate property income to be separate.Frasier's salary is $42,000 and Marcella's salary is $46,000.Marcella receives dividend income of $4,000 from stock inherited from her parents.Frasier receives interest income of $1,000 from bonds purchased with his salary after marriage.Frasier and Marcella receive $3,200 dividend income from stock they purchased jointly.Marcella's income would be

Accepted Answer

A) $50,000. 
B) $50,100. 
C) $51,100. 
D) $51,600.

Question 4

Carolyn,who earns $400,000,is required to pay John,her ex-husband,$200,000 as part of the property settlement as a result of their divorce.In turn,John transfers stock worth $50,000 to Carolyn.What is the amount of Carolyn's adjusted gross income for the year?

Accepted Answer

A) $200,000 
B) $250,000 
C) $400,000 
D) $450,000

Exam 19: Gross Income: Inclusions

Property settlements made incident to a divorce have no immediate tax consequences; that is,the transfer from one spouse to another is not taxable.

Carolyn,who earns $400,000,is required to pay John,her ex-husband,$200,000 as part of the property settlement as a result of their divorce.In turn,John transfers stock worth $50,000 to Carolyn.What is the amount of Carolyn's adjusted gross income for the year?