All the following are examples of non-taxable income, except:

Select one:

a. Proceeds received as the beneficiary of a life insurance contract due to the death of the insured.

b. Income from illegal activities.

c. Shares of stock received as an inheritance.

d. Cash received as a gift.

e. All of these are non-taxable.

2. Which of the following state and local income taxes are deductible on Schedule A?

Select one:

a. Tax withheld from salary

b. Estimated tax payments

c. Payment of balance due for an earlier tax year

d. Mandatory SDI contributions

e. All of these

f. None of these

3.Justin received a statement reporting $1,555 of interest income from a bank account he has in Canada.

Select one:

a. He must file an FBAR since his interest income exceeds $1,500.

b. He is not required to complete Schedule B, Part III since his foreign income is less than $10,000.

c. He is not required to file an FBAR since his interest income does not exceed $10,000.

d. He is required to complete Schedule B, Part III since he has a financial interest over a foreign financial account.

4.U.S. Savings Bonds are generally purchased for an amount that is less than their face value, or a discounted rate. The face value of the bond at maturity is from the interest that accrues over the life of the bond. How is this interest reported on the tax return?

a. It can be reported at maturity of the bond or when it is cashed.

b. It can be reported as the increase in redemption value each year.

c. Either of these.

d. Neither of these.

Ana is single and age 46, lost his job in 2019 and did not find a new one until February 2020. Her gross income for 2019 was $9,100, and she was not required to file a return for 2019. Ana’s tax after withholding on the 2020 return is $1,216. Will ana be required to pay a penalty for underpayment of estimated taxes?
Select one:
a. No, because he was not employed for the full year.
b. Yes, because he is under age 65.
c. No, because he was not required to file a 2019 return.
d. Yes, because his 2020 liability is over $1,000.

Answer rating: 100% (QA)

The detailed answer for the above question is provided below Question 1 b Income from illegal activi... View the full answer