What is the amount to be included in Harold’s gross income for the current year? If Doris itemizes her deductions for 2011, then the amount deductible for interest expense as an itemized deduction is: (Points :

What is the amount to be included in Harold’s gross income for the current year? If Doris itemizes her deductions for 2011, then the amount deductible for interest expense as an itemized deduction is: (Points :

PSMITH FED. TAX

During 2011, Doris paid the following interest charges:
Home mortgage $6,000
On loan to purchase a new car $1,500
On student loan $800
If Doris itemizes her deductions for 2011, then the amount deductible for interest expense as an itemized deduction is: (Points :
5)

$1,500.
$6,000.
$7,500.
$8,300.
None of the above

4. (TCOs 3, 4, 5, & 7) Isabel’s income from her investments for the current year is as follows:
Gain on the sale of Rosebud Country school bonds $3,000
Interest on Rosebud County school bonds $8,500
Interest received during the year on U.S. government bonds $6,500
Total $18,000
Isabel’s gross income from the above is: (Points : 5)

$3,000.
$9,500.
$15,000.
$18,000.
None of the above

5. (TCOs 3, 4, 5, & 7) Under the terms of a divorce agreement, Troy is to pay his wife Brook $1,200 per month.
The payments are to be reduced to $800 per month when their 12-year-old child reaches age 18. During the current year, Troy paid
$14,400 under the agreement. Assuming all of the other conditions for alimony are satisfied, Troy can deduct from gross income (and
Brook must include in gross income) as alimony: (Points : 5)
$0.
$4,800.
$9,600.
$14,400.
None of the above

6. (TCOs 3, 4, 5, & 7) During the current year, Harold sustained a serious injury in the course of his
employment. As a result of the injury sustained, he received the following payments during the year:
Unemployment compensation $7,000
Worker’s compensation $5,000
Reimbursement from his employer’s accident and health plan for medical expenses paid by Harold $1,000
Damages for physical personal injuries $8,000
What is the amount to be included in Harold’s gross income for the current year? (Points : 5)

$5,000
$6,000
$7,000
$8,000
None of the above

7. (TCOs 3, 4, 5, & 7) IRA contributions should be treated as: (Points : 5)
a deduction from AGI subject to the 2 percent of AGI floor.
a deduction from AGI not subject to the 2 percent of AGI floor.
not deductible.
deductible for AGI.
None of the above

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