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4. Jane purchased an annuity contract that pays her $800 per month. The
annuity cost her $50,000 and it has an expected return of $100,000. How
much of each monthly annuity payment is includible in Jane's gross
income?
5. Which of the following is not considered "constructive receipt" of
income?
Mr.W received a check on December 30, 2009 for services rendered, but
was unable to make a deposit until January 3, 2010.
6. Stan and Anne were divorced in January 2009. The provisions of the
divorce decree and Anne's obligations follow: (1.) Transfer the title in
their resort condo to Stan. At the time of the transfer, the condo had a
basis to Anne of $75,000, a fair market value of $95,000; it was subject
to a mortgage of $65,000. (2.) Anne is to make the mortgage payments
for 17 years regardless of how long Stan lives. Anne paid $8,000 in 2009.
(3.) Anne is to pay Stan $1,000 per month, beginning in February, for 10
years or until Stan dies. Of this amount, $300 is designated as child
support. Anne made five payments of $900 each in 2009 (February-
June). What is the amount of alimony from his settlement that is
includible in Stan's gross income for 2009?
7. To be deductible for tax purposes, a trade or business expenditure
must be:
8. Mr. Wilson is 66 years old and single. His income for 2009 consisted
of the following: Taxable pension $10,000 Taxable interest 9,000
Taxable dividends 5,000 Social security payments 5,000 He did not have
any adjustments to income. What amount of W's social security benefits
is taxable?
9. Explain the Assignment of Income Doctrine (AID) and the "fruit-of-
the-tree" doctrine.
10. Explain the Constructive Receipt Doctrine.