At a time when he owns total assets with a market value of $30,000 and has liabilities of $65,000, Peter Price files for bankruptcy and all debts are discharged. How much gross income, if any, must Peter report on his Form 1040 for the year of the debt discharge? 

30,000

 35,000 

65,000 

5,000 

None of the above

Brenda Bueller is a vice president and major shareholder of Bueller, Inc. capital stock. During the current year, Brenda receives salary from Bueller, Inc. of $400,000 and is anticipating a profit-sharing bonus of approximately $50,000 based on the company's net income for the year. Brenda may draw up to $20,000 of bonus at any time after December 15 of the current year, however. Any additional bonus amount will not be available to Brenda until the books are closed and final accounting adjustments made after the end of the year. Additionally, Bueller, Inc. normally pays one cash dividend per year, usually on or around December 29. Brenda's dividend will be $25,000 and the company comptroller sent Brenda an email on December 27 informing her of the amount and asking her to stop by the Treasurer's office (down the hall from Brenda's office) to pick up her check. Brenda responds to the email with a request that the dividend check be mailed to her residence. Brenda receives the dividend check via mail on January 4 of the next year. Based on the above facts, how much gross income should Brenda report on her Form 1040 for the current year? 

475,000

420,000 

425,000 

445,000 

None of the above

Under the general rule, a distribution of a corporation's own stock to its own shareholders will be nontaxable unless

 The distribution is proportionate 

The distribution consists of preferred stock 

The distribution is on preferred stock 

All of the three will be taxable 

All of the three will be nontaxable

Answer rating: 100% (QA)

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