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Life Insurance and Gross Income

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Chapter 2: Gross Income and Exclusions
1. Noncash items received as income must be included in income at their fair market value.
True False 2. Awards, bonuses, and gifts are all included in gross income.
True False 3. Disability benefits are generally taxable to the individual receiving the amounts.
True False 4. Interest income received by a cash basis taxpayer is generally reported in the tax year it is received.
True False 5. Interest on U.S. Treasury Bonds is not taxable.
True False 6. Taxpayers must report interest income on Series EE savings bonds as the interest accrues.
True False 7. A gift received for opening a bank account is not taxable income to the recipient.
True …show more content…

True False 30. A "no-additional-cost" service includes only those services in the major line of business in which the employee is employed.
True False 31. In some cases, Social Security benefits may be partially taxable.
True False 32. Which of the following amounts must be included in the gross income of the recipient?
A. Child support payments
B. Welfare payments
C. Gifts
D. Royalties
E. All of the above are included in gross income 33. All of the following amounts must be included in gross income, except:
A. Gambling winnings
B. Partnership income
C. Accident insurance proceeds
D. Dividends
E. Jury duty fees 34. All of the following amounts are excluded from gross income, except:
A. Tips and gratuities
B. Child support payments
C. Scholarship grants for tuition
D. Gifts
E. Veterans ' benefits 35. Which of the following is generally excluded from gross income?
A. Dividends
B. Rewards
C. Disability benefits
D. Passive income
E. None of the above 36. Which of the following is excluded from gross income?
A. Prizes
B. Scholarships for tuition
C. Hobby income
D. Rental income
E. All of the above are included in gross income 37. Which of the following is classified as nontaxable income?
A. Unemployment compensation
B. Dividend income
C. Income from real estate rental property
D. Welfare

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