Need accounting help with Federal income Tax – True and False

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All questions are true and false

Withdrawals
from a traditional IRA must begin when the taxpayer reaches age 70 1/2.

 True

 False

If a
taxpayer converts a traditional IRA into a Roth IRA, then when distributions
are taken from the Roth at retirement a portion of the distributions will be
taxable.

 True

 False

If a
taxpayer does not qualify to deduct contributions to a traditional IRA then no
contributions can be made to the IRA.

 True

 False

Distributions
from Roth IRAs are generally not taxable as long as certain time requirements
have been met.

 True

 False

Contributions
to Roth IRAs are deductible as long as the taxpayer’s income does not exceed
certain limits.

 True

 False

M Company
provides all of its employees with a gift certificate valued at $25 to a local
restaurant to celebrate the company’s 25th anniversary. This gift is not
included in the employee’s income.

 True

 False

C works at
a department store and is allowed to purchase a dress for $30 which the store
had bought for $25 from its suppliers. The retail price for the dress at the
store is $50. C does not have to report any income from this purchase.

 True

 False

T works at
a fast-food restaurant and is allowed each day to bring home hamburgers and
other items that had not been sold for his wife and four children. Since the
restaurant did not sell these items T does not have to include the value of
this food in his taxable income.

 True

 False

D occasionally
uses the copy machine at his office to copy handouts for a class he teaches at
a local college. During the current year he made a total of 40 copies. The
value of these copies will be included in his taxable income.

 True

 False

S works at
a hospital and is allowed to eat in the hospital’s cafeteria free of charge so
she will be on call if an emergency arises. The value of these meals is
excluded from S’s taxable income.

 True

 False

P’s
employer pays the health insurance premiums for P and his family. These
premiums can be excluded from P’s taxable income.

 True

 False

G ‘s
employer provides her with a $75,000 group term life insurance policy that does
not discriminate. G can exclude this benefit from her taxable income.

 True

 False

W owns a
long-term care policy that paid her $150 per day in the current year because
she could not care for herself. Since the payments received are not actually
for medical expenses W much include them in taxable income.

 True

 False

F owns a
rental house which is rented to P. During Year 4 P paints the house in lieu of
paying rent for two months of $1,000. F does not have to include the $1,000 in
rental income.

 True

 False

F owns a
rental house which is rented to P. At the end of Year 2, P prepays $2,000 rent
for the first four months of Year 3. F reports income on the accrual basis. F
can report the $2,000 as income in Year 3.

 True

 False

Tax methods
of accounting, once selected, cannot be changed without permission of the
Internal Revenue Service.

 True

 False

Regular C
corporations must always use the accrual method accounting.

 True

 False

R, an
accrual basis taxpayer, was paid $5,000 as an advance payment of goods in Year
1. The goods will not be delivered until Year 2. For financial reporting
purposes, the $5,000 will be recognized in Year 1. R may defer recognition of
the income for tax purposes until Year 2.

 True

 False

S, an
accrual basis taxpayer, was paid $1,000 in Year 1 for some services that will
not be performed until Year 2. S may elect to defer recognition of the income
until Year 2.

 True

 False

Taxpayers
on the cash basis do not have any basis in their accounts receivables since
income is not recognized until received.

 True

 False

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