Melka purchased an annuity for $24,000 in 2020. Under the contract, she will receive $300 each...

 

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Melka purchased an annuity for $24,000 in 2020. Under the contract, she will receive $300 each month for the rest of her life. According to the actuarial estimates, Melka will live to receive 96 payments and will receive a 3% return on her original investment. O a. If Melka collects $3,000 in 2020, her gross income is $630 (0.03 × $21,000). b. Melka has no gross income until she has collected $12,000. Oc. If Melka lives to collect more than 96 payments, all of the amounts collected after the 96th payment must be included in taxable income. If Melka lives to collect only 60 payments before her death, she will report a $6,000 loss from the annuity [$24,000-(60 x $300)- $6,000) on her final return. Od. QUESTION B Max is a full-time graduate student at Morehouse Medical University. He serves as a teaching assistant for which he is paid $1.600 per month for eight months and his 56,0 0 0 tuition is waived. The university waives tuition for all of its employees. In addition, Max receives a $2,500 research grant to pursue his own research and studies. Max's gross income from the above is 50 OD. 56,300. O $15,300. d. $12,800. QUESTION 9 Sean was diagnosed with a terminal illness. His doctor estimated that Sean would live no more than 20 months. After he received the doctom diagnosis, Sean cashed in his life insurance policy and used the money to take a trip to see friends before he died. Sean had paid $14,000 in premiums on the policy, and he collected $40,000, the cash surrender value of the policy. Max enjoys excellent health, but he cashed in his lit insurance policy to purchase a new home. Max had paid premiums of $14,000 and collected $40,000 from the insurance company. a. Neither Sean nor Max is required to recognize gross income. Ob. Both Sean and Max must recognize $38,000 ($50,000-$12,000) of gross income. Oc. Max must recognize $28,000 ($40,000-$12,000) of gross income, but Sean does not recognize any gross income. O d. None of the above. QUESTION 10 Cynthia sued her former employer for a leg injury she suffered at work in 2020. As a result of the injury, she was partially disabled. In 2021, shi received $250,000 for her loss of future income, $255,000 in punitive damages because of the employer's disregard for worker safety, and $10,000 for medical expenses. The medical expenses were not deducted on her 2020 return. Cynthia's 2021 gross income from the above is: a. $505,000. Ob. $412,000. Oc. $265,000. d. $255,000, QUESTION 11 Vince's itemized deductions exceed the standard deduction allowed for the current year. Under these circumstances, Vince cannot claim the standard deduction. True False Melka purchased an annuity for $24,000 in 2020. Under the contract, she will receive $300 each month for the rest of her life. According to the actuarial estimates, Melka will live to receive 96 payments and will receive a 3% return on her original investment. O a. If Melka collects $3,000 in 2020, her gross income is $630 (0.03 × $21,000). b. Melka has no gross income until she has collected $12,000. Oc. If Melka lives to collect more than 96 payments, all of the amounts collected after the 96th payment must be included in taxable income. If Melka lives to collect only 60 payments before her death, she will report a $6,000 loss from the annuity [$24,000-(60 x $300)- $6,000) on her final return. Od. QUESTION B Max is a full-time graduate student at Morehouse Medical University. He serves as a teaching assistant for which he is paid $1.600 per month for eight months and his 56,0 0 0 tuition is waived. The university waives tuition for all of its employees. In addition, Max receives a $2,500 research grant to pursue his own research and studies. Max's gross income from the above is 50 OD. 56,300. O $15,300. d. $12,800. QUESTION 9 Sean was diagnosed with a terminal illness. His doctor estimated that Sean would live no more than 20 months. After he received the doctom diagnosis, Sean cashed in his life insurance policy and used the money to take a trip to see friends before he died. Sean had paid $14,000 in premiums on the policy, and he collected $40,000, the cash surrender value of the policy. Max enjoys excellent health, but he cashed in his lit insurance policy to purchase a new home. Max had paid premiums of $14,000 and collected $40,000 from the insurance company. a. Neither Sean nor Max is required to recognize gross income. Ob. Both Sean and Max must recognize $38,000 ($50,000-$12,000) of gross income. Oc. Max must recognize $28,000 ($40,000-$12,000) of gross income, but Sean does not recognize any gross income. O d. None of the above. QUESTION 10 Cynthia sued her former employer for a leg injury she suffered at work in 2020. As a result of the injury, she was partially disabled. In 2021, shi received $250,000 for her loss of future income, $255,000 in punitive damages because of the employer's disregard for worker safety, and $10,000 for medical expenses. The medical expenses were not deducted on her 2020 return. Cynthia's 2021 gross income from the above is: a. $505,000. Ob. $412,000. Oc. $265,000. d. $255,000, QUESTION 11 Vince's itemized deductions exceed the standard deduction allowed for the current year. Under these circumstances, Vince cannot claim the standard deduction. True False

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