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question 1 for a person who is in the 35 marginal tax bracket s 1 000 of tax exempt 4287428

Question

1. For a person who is in the 35% marginal tax bracket, S 1,000 of tax-exempt income is equivalent to $1,350 of income that is subject to tax. a. True b. False 2. 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 can be excluded from Steve's gross income as an inheritance. a. True b. False 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 Brooke's services. For parties of less than 7, the tips 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. 3. a. True b. False 4. Mel was the beneficiary of a $45,000 group term life insurance policy on his wife. His wife's 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 S2,500 interest during the current year. Mel's Federal gross income from the above is $2,500. a. True b. False 7. Gary cashed in an insurance policy on his life. He needed the funds to pay for his terminally ill wife's medical expenses. He had paid $12,000 in premiums and he collected $30,000 from the insurance company. Gary is not required to include the gain of $18,000 ($30,000- $12,000) in gross income. a. True b. False

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