Jim and Sarah are married and both work full-time.  Jim’s employer sells sporting equipment and outfitting but gives employees a 20% discount.  Jim buys $600 of his employer’s merchandise during the year for a total amount of $480; the employer's cost of the merchandise is $350.  Sarah’s employer is a gardening and landscaping company and performs outdoor work on the couple’s property with a value of $500 free of charge.  Which of the following statements correctly characterizes the tax effects of these discounts?

options:

	Both employee discounts are completely excludable by Jim and Sarah
	Jim's discount is excludable but Sarah's discount is partially taxable
	Both Jim and Sarah's discounts are partially taxable
	Neither Jim nor Sarah's discounts are excludable

2-Question options:Mary (age 65) is an unmarried taxpayer who currently supports her 16 year old granddaughter who lives with her.  Mary's husband Jack died in 2019.  Mary has itemized deductions totaling $17,000 for the 2020 tax year.  Which of the following statements correctly characterizes Mary's tax situation in 2020?

	Mary is an unmarried taxpayer filing as "single" and will choose to itemize deductions rather than taking the standard deduction
	Mary is an unmarried taxpayer filing as "head of household" and will choose to itemize deductions rather than taking the standard deduction
	Mary is an unmarried taxpayer filing as "head of household" and will choose the standard deduction rather than taking the itemized deductions
	Mary is an unmarried taxpayer filing as "Qualifying Widow/Surviving Spouse" and will choose the standard deduction rather than taking the itemized deductions

3- Tim, age 20 and a full-time student, is a dependent of his parents. During 2020, he had $13,000 of wages from a part-time job. The amount of his standard deduction is __________

	$1,100
	$12,400
	$13,350
	some other amount

4- Which of the following refunds received are taxable income?

	Julia and Jim paid local property taxes of $5,000 in 2019 but challenged their assessment and received a refund of $800 of those taxes in 2020.  The couple did not itemized their deductions on the federal tax return for 2019.
	During 2020, Laura received a refund from a department store credit card because of being overcharged on purchases of non-deductible consumer items during 2019.
	During 2020, Ajax Leasing received a $5,000 refund from a law firm that represented Ajax in business litigation during 2019.  The original payment of $30,000 was treated as a business expense on Ajax's 2019 federal tax return.
	None of the above are taxable refunds

Answer rating: 100% (QA)

Answers 1 Only discounts on products upto the cost of the item are qual... View the full answer