ACC 307 WK 5 Midterm Exam Chapter 5

May 1st, 2015
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ACC 307 WK 5 Midterm Exam Chapter 5

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CHAPTER 5Student: ___________________________________________________________________________1.For a person who is in the 35% marginal tax bracket, $1,000 of tax-exempt income is equivalent to $1,350 of income that is subject to tax.TrueFalse2.John told his nephew, Steve, if you maintain my house when I cannot, I will leave the house to you when I die. Steve maintained the house and when John died Steve inherited the house. The value of the residence must be included in Steves gross income.TrueFalse3.Brooke works part-time as a waitress in a restaurant. For groups of 7 or more customers, the customer is charged 15% of the bill for Brookes services. For parties of less than 7, the tips are voluntary. Brooke received $11,000 from the groups of 7 or more and $7,000 in voluntary tips from all other customers. Using the customary 15% rate, her voluntary tips would have been only $6,000. Brooke must include $18,000 ($11,000 + $7,000) in gross income.TrueFalse4.Mel was the beneficiary of a $45,000 group term life insurance policy on his wife. His wifes employer paid all of the premiums on the policy. Mel used the life insurance proceeds to purchase a United States Government bond, which paid him $2,500 interest during the current year. Mels Federal gross income from the above is $2,500.TrueFalse5.Zack was the beneficiary of a life insurance policy on his wife. Zack had paid $20,000

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