All of the following statements are true except: A) Under the cash method, prepaid income such...
Question:
All of the following statements are true except:
A) Under the cash method, prepaid income such as rent is usually taxed when received rather than when earned.
B) Municipal bond interest is taxable on a state tax return.
C) Alimony paid by the taxpayer is taxable.
D) Income earned by selling goods on the internet is taxable.
Taxable Income:
Taxable income is the total income or revenue an individual or business earned during the period calculated to determine the tax payable to the government.
Answer and Explanation: 1
Become a Study.com member to unlock this answer! Create your account
View this answerThe answer is option B.
Option B is a false statement because municipal bonds are not taxable by the Federal government. Hence, their interests are...
See full answer below.
Ask a question
Our experts can answer your tough homework and study questions.
Ask a question Ask a questionSearch Answers
Learn more about this topic:
Get access to this video and our entire Q&A library
Taxable & Non-Taxable Benefits: Definition & Examples
from
Chapter 6 / Lesson 1
33K
Explore how taxable and non-taxable benefits can be included in a worker's compensation package and understand their advantages and disadvantages. Review what compensation is before analyzing both taxable and non-taxable benefits.
Related to this Question
- All of the following statements are true except a) Under the cash method, prepaid income such as rent is usually taxed when received rather than when earned. b) Municipal bond interest is taxable.
- Which of the following is a temporary difference classified as a revenue or gain that is taxable after it is recognized in financial income? a) Subscriptions received in advance. b) Interest received on a municipal obligation. c) Prepaid rent received in
- Income before taxes = $900,000 Income before taxes included the following: Interest income of $80,000 (from municipal bonds) Rental income was collected in advance in 2013 and earned in 2014 = $20,000 Depreciation per books = $40,000 and per income taxes
- Journalize the following: Receipt of $70000 by a taxpayer from a tenant for rental income. $15000 pertains to 2017, and $55000 pertains to 2018. a. If the taxpayer is on the cash basis for tax purposes b. If the taxpayer is on the accrual basis for tax pu
- A taxpayer will be ineligible for the earned income credit if he or she has disqualified investment income of more than $3,150. Disqualified income includes all the following except: A) net capital gains. B) tax-exempt interest. C) net rental income. D) s
- A corporation books, which are maintained using the accrual method, show the following income and expense item for 2016 tax year: Gross sales and receipts $800,000 Returns and allowances 2,000 Cost of goods sold 200,000 Taxable interest income 20,000 Off
- The corporation's books, which are maintained using the accrual method, show the following income and expense items for the 2016 tax year: Gross sales $95,000 Returns and allowances $5,000 Cost of goods sold $350,000 Taxable interest income $20,000 Offic
- Interest is received on an investment in tax-exempt municipal obligations. The above circumstance results in differences between financial statement income and taxable income Is it (A) a temporary difference resulting in a deferred tax asset, (B) a tempor
- State whether each situation is a deferral or an accrual. a. Unrecorded interest on savings bonds is $765. b. Property taxes that have been incurred but that have not yet been paid or recorded amount to $1,034. c. Legal fees of $2,890 were collected in ad
- The following information was obtained from Quayle Company's income statement: Income before Interest and Income Tax Expense - $690,000 ; Interest Expense 77,500 ; Income before Income Tax Expense - 6
- All of the following are for AGI deductions except: A. Contributions to qualified retirement accounts B. Rental and royalty expenses. C. Charitable contributions. D. Business expenses for a self-employed taxpayer.
- A review of Bearing's Year 2 records disclosed the following tax information: Wages $ 20,000; Taxable interest and qualifying dividends 4,000; Schedule C trucking business net income 32,000; Rental (
- Which of the following is not a typical federal/state adjustment? A) Dividends received deduction. B) Depreciation. C) U.S. obligation interest income. D) Meals and entertainment.
- Financial statements generally include all but which of the following: A) Income statement. B) Federal income tax return. C) Balance sheet. D) Statement of cash flows.
- The following information relates to Tom, a single taxpayer, age 18. Wages $7,000 Taxable interest income 425 Itemized deductions 310 Tax Year 2019 Computation of taxable income.
- Chuck, a single taxpayer, earns $75,000 in taxable income and $10,000 in interest from an investment in City of Heflin bonds. (Use the U.S. tax rate schedule.) (Do not round intermediate calculations.
- Chuck, a single taxpayer, earns $137,750 in taxable income and $15,500 in interest from an investment in City of Heflin bonds. (Use the U.S. tax rate schedule.) (Do not round intermediate calculations
- Using the legend provided, classify the following statement: A= Tax avoidance E=Tax evasion N=Neither \\ Sam decided not to report interest income from a bank because the amount is only $11.75.
- Income tax was $361,437 for the year. The income tax payable was $31,000 and $41,788 at the beginning and end of the year. Cash payments for income tax reported on the statement of cash flows using the method is: a. $361,437 b. $434,225 c. $372,225 d.
- Determine Betty's taxable income for the year given the following information: Salary: $78,000 Child care credit: $1,000 Personal and Dependency exemptions: $12,000 Investment interest: $4,000 IRA contribution: $5,500 Municipal bond interest: $500 Federal
- During the fiscal year 2012, Dioubate Cie earned $10,000 of interest revenue on an investment in a tax-free municipal bond. Which of the following items would be increased by the municipal bond revenue? A. Pre-Tax Income B. Income Tax Expense C. Taxable
- Chuck, a single taxpayer, earns $82,000 in taxable income and $17,750 in interest from an investment in the City of Heflin bonds. (Use the U.S. tax rate schedule.) (Do not round intermediate calculations. Round your answers to 2 decimal places.) a. If Chu
- Tax-deductible borrowing (mortgage interest) used to purchase tax-exempt assets (state and local bond interest) is an example of a) tax arbitrage. b) efficient investment. c) a prohibited tax-motivated transaction. d) converting non-taxable interest (
- Determine the amount of taxable income that should be reported by a cash-basis taxpayer in 2014 in the following case: On December 18, 2014, a landlord rents an apartment for $700 per month and collects the first and last months' rent up front. It is cust
- Which of the following would create a permanent difference between published statements and tax returns? A) Municipal bond interest income B) Deductible charitable contributions C) MACRS depreciation D) Bad debt expense
- Under what conditions is an accrual-basis-tax-payer allowed to defer reporting amounts received in the advance payments received for services? a. Is the interest received from government obligations taxable? Explain. b. What impact does the fact that so
- Tendai has AGI of $70,000 and has made the following payments: State income tax withholding 2,200 State sales tax paid 2,100 Federal income tax withholding 8,000 Social security tax withheld from wages 5,600 State gift tax 6,000 Town real estate tax 9,000
- What is the gross income for a single taxpayer that has: Gross salary $19,600 Interest on bank savings account 1,410 Interest on municipal bond 150 Interest on corporate bond 250 Ordinary dividend income from mutual fund 300 Cash prize in State of I
- Interest expenses eligible for deduction as itemized deductions include all of the following except: a. interest on student loans. b. points paid on the purchase of the taxpayer's main home. c. int
- Determine the amount of taxable income that should be reported by a cash-basis taxpayer in 2014 in the following case: A taxpayer has a business of renting computers on a short-term basis. On December 1, 2014, she rents a computer for a $200 rental fee an
- Which of the following is not usually departmentalized? a. Interest expense b. Depreciation expense c. Rent expense d. Payroll taxes expense
- Chuck, a single taxpayer, earns $57,500 in taxable income and $19,500 in interest from an investment in City of Heflin bonds. (Do not round intermediate calculations. Round your answers to 2 decimal p
- In 2017, AutoUSA Inc. received $4,600,000 of book income, including $20,000 of interest income from tax-exempt municipal bonds. AutoUSA reported $3,600,000 of regular business expenses. If it made $350,000 of estimated tax payments (prepayments) throughou
- Income tax was $175,000 for the year. Income tax payable was $30,000 and $40,000 at the beginning and end of the year, respectively. Cash payments for income tax reported on the statement of cash flows using the direct method is: a. $175,000 b. $215,000
- All of the following are benefits of leasing except: A. They have the ability to shift the tax benefits from depreciation and other deductions from a lessee that has little or no taxable income to a lessor that has substantial taxable income. B. They prov
- Loriann's, a single taxpayer, had the following income and deductions for the tax year: Income: Salary $61,000 Business income $30,000 Interest income from taxable bonds $15,000 Tax-exempt bond interest $3,500 Total income $109,500 Deductions: Business
- 9. Assume the following facts for Moore Company in 2015: Book income before tax: $800,000. The following items were included in income: [{MathJax fullWidth='false' \displaystyle{ \bullet ] Interest income of $80,000 was received from an investment in mu
- Which of the following is not excluded from gross income? a. Interest income from municipal bonds. b. Gifts. c. Dividend income. d. Scholarships.
- Which of the following are true? A. Deductions are subtracted from gross income to arrive at AGI. B. Exemptions are subtracted from gross income to arrive at AGI. C. Deductions are subtracted from AGI to arrive at taxable income. D. Exemptions are sub
- Which of the following causes a permanent difference between taxable income and pretax accounting income? A) The installment method used for sales of property. B) MACRS depreciation method used for equipment. C) Interest income on municipal bonds. D) Perc
- Under the cash method of tax accounting, tax deductions are generally taken when: a) the liability arises b) the taxpayer elects to take the deduction c) payment is made d) None of the above
- Make a journal entry for the following accounts: Estimated Revenues: Taxes Real Property $1,679,070 Interest and Penalties on Taxes 9,000 Licenses and Permits 600,000 Fines and Forfeits 410,000 Intergovernmental Revenue 275,000 Charges for
- Which of the following would never require reporting deferred tax assets or deferred tax liabilities? a. Depreciation on equipment b. Accrual of warranty expense c. Life insurance premiums for the payer's benefit d. Rent revenue received in advance
- Determine the amount of taxable income that should be reported by a cash-basis taxpayer in 2014 in the following case: A taxpayer is in the business of renting computers on a short-term basis. On December 1, 2014, she rents a computer for a $200 rental fe
- Determine Hazel's gross income from the following receipts for the year: Gain on sale of Augusta County bonds $800 Interest on U.S. government savings bonds 400 Interest on state income tax refund 200 Interest on Augusta County bonds 700 Patronage dividen
- Which of the following is referred to as net pay? a. Gross pay minus federal and state income taxes. b. Gross pay minus all deductions. c. Take-home pay plus all deductions. d. All deductions plus all with holdings.
- Chuck, a single taxpayer, earns $82,000 in taxable income and $17,750 in interest from an investment in City of Heflin bonds. (Use the U.S. tax rate schedule.) (Do not round intermediate calculations.
- 1) Chuck, a single taxpayer, earns $70,000 in taxable income and $10,000 in interest from an investment in City of Heflin bonds. What is his current marginal tax rate? (Percentage amount without perce
- Compute gross income for a single (unmarried) taxpayer who has income that consists of: Gross salary $19,600 Interest on bank savings account 1,410 Interest on municipal bond 150 Interest on corporate bond 250 Ordinary dividend income from mutual fund 300
- Zelda has been a widow for three years and files a return as a single taxpayer. Items of income received by her in 2014 were as follows: Interest on insurance dividends left on deposit in bank: 50 Interest on state income tax refund: 25 Gambling winnings:
- During the current year, Donna, a single taxpayer, reports the following items income of income and expenses: Income: Salary $86,000 Municipal bond interest 1,300 Bank account interest 2,300 Alimony received 24,000 Capital gain on an asset held less
- A temporary difference that would result in deferred tax liability is: a. Interest revenue on municipal bonds. b. Accrual of warranty expense. c. Excess of tax depreciation over financial accounting depreciation. d. Subscriptions received in advance.
- Chuck, a single taxpayer, earns $77,750 in taxable income and $29,250 in interest from an investment in the City of Heflin bonds. a. If Chuck earns an additional $57,250 of taxable income, what is his marginal tax rate on this income? b. What is his mar
- A man earned wages of $31,700, received $2,100 in interest from a savings account, and contributed $3,000 to a tax-differed retirement plan. He was entitled to a personal exemption of $3,400 and had deductions totaling $5,200. Find his gross income, adjus
- The following information applies to Emily's 2018 taxable income. Her filing status is single. Salary $85,000 Interest income from bonds issued by Xerox 1,100 Alimony payments received (divorce finalized in 2014) 6,000 Contribution to traditional IRA 5,50
- Non-deductible taxes include all of the following except: a. social security taxes. b. federal gift taxes. c. real estate taxes paid on behalf of the taxpayer's son. d. gasoline taxes. e. all of the above are non-deductible taxes.
- Marlene, a cash basis taxpayer, invests in Series EE U.S. government savings bonds and bank certificates of deposit (CDs). Determine the tax consequences of the following on her 2016 gross income. a)
- Several useful techniques permit an individual taxpayer to postpone income recognition. They include all the following, except a) cash investments in X, Inc. bonds. b) installment sales of property. c) deferred compensation arrangements. d) income on Trea
- Haag Corp.'s 2021 income statement showed a pretax accounting income of $2,500,000. To compute the federal income tax liability, the following 2021 data are provided: Income from exempt municipal bonds $100,000 Depreciation deducted for tax purposes in ex
- When computing the accumulated earnings tax, which of the following is not a reduction to arrive at accumulated taxable income? a) Accrued federal income taxes b) Dividends-paid deduction c) Accumulated earnings credit d) NOL deduction claimed
- The following information is taken from the financial statements of Aruban Enterprises. Year Taxable and pre-tax financial income Income tax rate Income tax paid 2009 $32,000 40% $12,800 2010 $29,300 35% $10,255 2011 $33,100 40% $13,240 2012 $22,500 34% $
- Use the following information to calculate cash paid for income taxes: Income tax expense $45,000 Income tax payable, January 1 $9,700 Income tax payable, December 31 $11,000
- 1. Calculate the cash payment for income taxes for MarkowitzCorporation based on the following information:income tax expense $93,000, $8,000 decrease infederal income taxes payable and $10,000 increase in state incometaxes payable during the year. A. $91
- Income taxation at the state level can be characterized by which of the following: a. Most states have different due dates than the federal return. b. Withholding procedures are not required. c. Most states do not allow a deduction for Federal income taxe
- Itemized deductions reported on Schedule A may include all of the following except: a. Interest paid on the mortgage for their vacation home. b. Interest paid on a loan where the proceeds were used to buy stock in a corporation. c. Use of one's persona
- State income taxes are deductible on Schedule A. In states that don't have state income taxes, the taxpayers may take another deduction instead (for 2015). What is that deduction? (a) General sales tax (b) Excise tax (c) Alternative minimum tax (d) Socia
- Tax Rates. Latesha, a single taxpayer, had the following income and deductions for the tax year 2015: Income: Salary $80,000 Business Income 25,000 Interest income from bonds 10,000 Tax-exempt bo
- Chuck, a single taxpayer, earns $132,500 in taxable income and $18,500 in interest from an investment in City of Heflin bonds. a. If Chuck earns an additional $42,800 of taxable income, what is his marginal tax rate on this income? b. What is his marginal
- Payroll Taxes and Benefits Expense includes all of the following except. a. Unemployment taxes. b. Medicare taxes. c. Pension contributions. d. State income taxes.
- The revenue account of a state or local government is credited when ________. (a) property taxes are recorded (b) property taxes are collected (c) the budget is recorded at the beginning of the year (d) the account is closed at the end.
- Chuck, a single taxpayer, earns $75,250 in taxable income and $26,250 in interest from an investment in City of Heflin bonds. (Use the U.S. tax rate schedule.) a. If Chuck earns an additional $64,000 of taxable income, what is his marginal tax rate on th
- George is single and age 56, has AGI of $265,000, and incurs the following expenditures in 2016. Medical expenses (before 10%-of-AGI floor) 27,000 Interest on home mortgage 15,000 State income tax
- Assume the following facts for Moore Company in 2015: Book income before tax: $800,000. The following items were included in income: \S Interest income of $80,000 was received from an investment in municipal bonds. This income is exempt for tax purposes
- Answer the following questions: With respect to the prepaid income from services, which one of the following is true? a) The treatment of prepaid income is the same for tax and financial accounting.
- Sanchez incurred the following items. Business income $120,000 Tax-exempt interest income 40,000 Payment to charity from 2011 income, paid March 1, 2012 20,000 Complete the following chart, indicating the charitable contribution deduction under the va
- Compute the taxable income for 2016 for Emily based on the following information. Her filing status is single. Salary $85,000 Interest Income on bonds $1,000 Alimony payments received $5,000 Contribu
- Which of the following is a true statement regarding the taxation of interest and dividends on a fiduciary income tax return? a. Only interest and dividends not treated ad distributed to the beneficiaries should be reported on page 1. b. Interest and di
- The Hosta Trust reports gross rent income of $194,000, expenses attributable to the rents of $135,800, and tax-exempt interest from state bonds of $48,500. Under the trust agreement, the trustee is to pay 20% of the annual trust accounting income to the A
- The Hosta Trust reports gross rent income of $97,400, expenses attributable to the rents of $68,180, and tax-exempt interest from state bonds of $24,350. Under the trust agreement, the trustee is to pay 20% of the annual trust accounting income to the Ame
- A single taxpayer provided the following information for 2016: Salary $80,000 Interest on local government bonds (qualifies as a tax exclusion) $4,000 Allowable itemized deductions $13,000 What is taxable income?
- Which of the following is not included in gross earned income when received? a. Prepaid rent b. Refundable security deposit c. Amounts received to cancel or modify a lease d. Copyright royalties
- Marc, a single taxpayer, earns $202,500 in taxable income and $6,250 in interest from an investment in city of Birmingham Bonds. Using the U.S. tax rate schedule for year 2015, what is his effective tax rate? \\\ A. 32.55% B. 24.16% C. 21.89% D. None
- The Hosta Trust reports a 2015 gross rental income of $100,200, expenses attributable to the rents of $70,140, and tax-exempt interest from state bonds of $25,050. Under the trust agreement, the trustee is to pay 20% of the annual trust accounting income
- Balance sheet and income statement data indicate the following: Bonds payable, 10% (due in 2 years) $1,000,000 Preferred 5% stock, $100 par (no change during year) $300,000 Common stock, $50 par (no change during year) $2,000,000 Income before income tax
- During the current year of 2018, Kent, a single taxpayer, reports the following items of income and expense: Income: Salary: $150,000 Dividends from Alta Corporation: $800 Interest income from a savings account: $1500 Rental income from a small apartment
- In 2015, Nadia has $100,000 ot regular taxable income. She itemizes her deductions as follows: real property taxes of $1,500, state income taxes of $2,000, and mortgage interest expense of $10,000 (no
- Classify each of the following as an operating, investing, or financing activity under ASPE. 1.Dividends paid to shareholders 2. Receipt of dividend income 3. Payment of salaries to employees 4. Payment of taxes
- Martin and Joanne filed a joint tax return. Their combined income and deductions are $150,000 salary income, $4,500 municipal bond interest income, $5,000 long-term capital gains, and $20,000 allowable itemized deductions. Calculate their taxable income a
- Latesha, a single taxpayer, had the following income and deductions for the tax year 2019: Income: Salary $100,000 Business Income 25,000 Interest income from taxable bonds 10,000 Tax-exempt bond interest 5,000 Total income 140,000 Deductions: Business e
- .Gross income is defined as all income you receive in the form of money, goods, property, and services that isn't exempt from tax. It also includes income from sources outside the United States or from the sale of your main home (even if you can exclude
- The table below gives some of the items in the U.S. National Income and Product Accounts in 2017. Item Amount Wages $11,600 Consumption expenditure 16,000 Indirect taxes 2,684 Interest, rent, and profit 6,000 Investments 4,400 Government expenditure 4,000
- Computation of Taxable Income. During 2015, James, a single, cash method taxpayer incurred the following expenditures: Qualified medical expenses $8,000 Investment interest expense 16,000 Other inves
- When filing their tax returns, almost all individuals use: A. the cash receipts and disbursements method. B. the accrual method. C. the recognition method. D. the accounting method.
- Which of the following is an example of an activity-based tax? a. An excise tax. b. A tax based on business net income. c. A gift tax on the transfer of assets. d. None of the above.
- Given the following Before Tax cash flow, calculate the After Tax deflated (real) IRR if the l5K asset be depreciated with a 5-yr MACRS, assuming a 39% tax rate and a f = 4%/yr inflation.
- Dews, Inc., an S corporation in Norfolk, Virginia, has revenues of $700,000, taxable interest of $580,000, operating expenses of $350,000, and deductions attributable to the interest income of $240,000. Calculate any passive investment income penalty tax
- Given the following account balances: Deferred inflows property tax at 9-30-16...........80,000 Property tax levy current year............................900,000 ncumbrances.....................................................30,000 Deferred i
- Marc, a single taxpayer, earns $100,000 in taxable income and $10,000 in interest from an investment in city of Birmingham Bonds. Using the U.S. tax rate schedule for year 2014, what is his effective tax rate (rounded)? A) 15.00% B) 15.19% C) 21.62% D) 19
- Determine the business entity that is being described by the following statement: 30% withholding tax on passive-type income (interest, dividends, etc.). a. ECI (Effectively Connected Income) b. FDAP (Fixed, Determinable, Annual and Periodic) c. FIRPTA (
- Income to U.S. taxpayers is taxed in the year it is derived in which of the following situations? 1) Interest earned but reinvested in a savings account in an FDIC savings bank. 2) Unrealized long-t
Explore our homework questions and answers library
Browse
by subject