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2. Which of the following items is not subject to federal income tax?
3. Sam owes Bob $8,000. Bob cancels (forgives) the debt. The
cancellation is not a gift and Sam is neither insolvent nor bankrupt.
Which of the following statements is correct concerning the impact
of this transaction?
Neither Bob nor Sam has any taxable income from this transaction.
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