Multiple Choice Questions 1. Frank, who is single, received $7,000 of social security benefits. His AGI before

Question:

Multiple Choice Questions
1. Frank, who is single, received $7,000 of social security benefits. His AGI before the social security benefits was $15,000. He also had $100 of tax-exempt interest. What is the amount of taxable social security benefits?
a. $18,600.
b. $7,000.
c. $0.
d. $3,500.
2. Items that must be reported on line 21 (other income) of Form 1040 include
a. income.
b. Jury duty pay.
c. Interest income.
d. Capital gains.
3. Which of the following fringe benefits provided by the employer is not taxable to the employee?
a. Sick pay.
b. Vacation pay.
c. Bonus.
d. 10% discount on products sold by the business; the gross profit percentage for the business is 20%.
4. Payments to employees under written dependent care assistance plans are tax-free. The exclusion cannot exceed the earned income of the lesser earning spouse and cannot exceed ________ for an individual filing as married filing jointly.
a. $2,500.
b. $5,000.
c. $5,150.
d. $5,250.
5. Employers can pay (or reimburse) employees for up to _________ per year of educational assistance, whether or not the education is job-related.
a. $5,250.
b. $5,150.
c. $5,000.
d. $2,500.
6. An example of nontaxable income is
a. Wages.
b. income.
c. Alimony payment.
d. Child support payment.
7. The amount of savings bond interest exempt from tax is limited when an individual is single and his or her AGI reaches
a. $113,950.
b. $89,700.
c. $76,000.
d. $91,000.
8. Original issue discount (OID) is deemed to be zero if it is less than ________ of the value, multiplied by the number of complete years to 0.25%.
b. 5%.
c. 25%.
d. 15%.
9. An individual with an OID instrument must annually report a portion of the OID as
a. income.
b. Interest income.
c. Capital gain income.
d. Pension income.
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