Question

Question 5
Marnie purchased a bond on August 15, 2019 for $2,100. $200 of the purchase price represented accrued interest. She received $210 in interest income on the bond on December 1, 2019. What is the proper treatment of the $210 interest income for federal income tax purposes?

1) $200 return of capital, the $10 can be currently included as interest income or deferred until the bond is cashed.

2) Marnie can elect to include the $210 as interest income in 2016 or defer the reporting until she cashes the bond.

3) $210 taxable as interest income.

4) Report the total payment as taxable interest, then report $200 as an adjustment to income.

Question 6
Ben is a waiter at a small restaurant. On working days, Ben is required to have lunch on the premises; however, the meal is furnished free-of-charge by Ben's employer. Additionally, Ben is permitted to have lunch free-of-charge on his day off. Under these circumstances, only the value of the lunches eaten by Ben on his day off is includible in Ben's taxable income.

   1) True
   2) False

Question 7
An example of a qualified benefit is an employer-subsidized cafeteria.

   1) True
   2) False

Answer 1

Question No. (5) -

Answer -

Marnie should report the total payment as taxable interest, then report $200 as an adjustment to income.

Hence, Option - (4) is Correct.

.

Question No. (6) -

Answer -

Only the value of the lunches eaten by Ben on his day off is includible in Ben's taxable income. The given statement is true.

Hence, Option - (1) is Correct.

.

Question No. (7) -

Answer -

The given statement is true.

Hence, Option - (1) is Correct.