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IRS Enrolled Agent Exam Unit 4 Questions and Answers
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IRS Enrolled Agent Exam Unit 4 Questions and Answers
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IRS Enrolled Agent Exam Unit 4Questions and Answers
Debby xbroke xher xleg xin xa xcar xaccident xin x2014 xand xwas xunable xto xwork xfor xthree
xmonths. xShe xreceived xan xaccident xsettlement xof x$13,000 xfrom xher xinsurance
xcompany. xduring xthis xtime, xshe xreceived x$7,500 xof xsick xpay xfrom xher xemployer.
xIn xaddition, xshe xreceived x$5,000 xfrom xthe xaccident xpolicy xshe xhad xpurchased
xherself. xHow xmuch xof xthis xincome xis xtaxable xto xDebby? x
A. x$5,000
B. x$7,500
C. x$12,500
D. x$18,000 x- xCorrect xAnswers x-B. xOnly xDebby's xsick xpay xis xtaxable xas xwages.
xSick xpay xfrom xan xemployer xis xtaxable xlike xwages xand xis xtherefore xincluded xin
xDebby's xgross xincome. xSettlements xfor xpersonal xinjuries xfrom xan xaccident xare xnot
xtaxable. xIf xa xtaxpayer xpays xthe xfull xcost xof xan xaccident xinsurance xplan, xthe
xbenefits xfor xpersonal xinjury xor xillness xare xnot xincluded xin xincome. xIf xthe xemployer
xpays xthe xcost xof xan xaccident xinsurance xplan, xthe xamounts xare xtaxable xto xthe
xemployee.
Income xwas xconstructively xreceived xin x2014 xin xeach xof xthe xfollowing xsituations
xexcept:
A. xWages xwere xdeposited xin xthe xtaxpayer's xbank xaccount xon xDecember x26, x2014,
xbut xwere xnot xwithdrawn xby xthe xtaxpayer xuntil xJanuary x3, x2015. x
B. xA xtaxpayer xwas xinformed xhis xcheck xfor xservices xrendered xwas xavailable xon
xDecember x15, x2014. xThe xtaxpayer xdid xnot xpick xup xthe xcheck xuntil xJanuary x30,
x2015. x
C. xA xtaxpayer xreceived xa xcheck xby xmail xon xDecember x31, x2014, xbut xdid xnot
xdeposit xthe xcheck xuntil xJanuary x5, x2015. x
D. xA xtaxpayer's xhome xwas xsold xon xDecember x28, x2014. xThe xpayment xwas xnot
xreceived xby xher xuntil xJanuary x2, x2015, xwhen xthe xescrow xcompany xreleased xthe
xfunds. x- xCorrect xAnswers x-D. xA xtaxpayer xdoes xnot xneed xphysical xpossession xof
xincome xin xorder xto xhave xconstructive xreceipt. xHowever, xincome xis xnot xconsidered
xconstructively xreceived xif xthe xtaxpayer xcannot xaccess xthe xfunds xbecause xof
xrestrictions. xSince xthe xtaxpayer's xcontrol xof xthe xreceipt xof xthe xfunds xin xthe xescrow
xaccount xwas xsubstantially xlimited xuntil xthe xtransaction xhad xclosed, xthe xtaxpayer
xdid xnot xconstructively xreceive xthe xincome xuntil xthe xfollowing xyear.
, Marisol xreceived xthe xfollowing xincome xand xfringe xbenefits xin x2014:
Wages x-- x$30,000
End xof xyear xbonus x-- x2,000
Parking xpass xper xmonth x-- x90
Employer xcontributions xto xher x401(k) xplan x-- x900
FMV xfree xgym xon xher xemployer's xpremises x-- x500
How xmuch xincome xmust xMarisol xreport xon xher x2014 xtax xreturn?
A. x$30,000
B. x$32,000
C. x$32,500
D. x$34,480 x- xCorrect xAnswers x-B. xOnly xthe xwages xand xthe xbonus xare xtaxable
x($30,000 x+ x$2,000). xThe xparking xpass xis xa xnotaxable xtransportation xbenefit, xand
xthe xemployer xcontributions xare xnot xtaxable xuntil xMarisol xwithdraws xthe xmoney
xfrom xher xretirement xaccount. xMarisol xdoes xnot xhave xto xreport xthe xuse xof xthe xgym
xbecause xit xis xon xthe xemployer's xpremises xand xtherefore xnot xtaxable.
Which xof xthe xfollowing xtip xincome xis xexempt xfrom xfederal xincome xtax?
A. xTips xof xless xthan x$20 xper xmonth
B. xNoncash xtips
C. xTips xnot xreported xto xthe xemployer
D. xAll xtips xare xtaxable x- xCorrect xAnswers x-D. xAll xtip xincome xis xsubject xto xfederal
xincome xtax, xwhether xcash xor xnoncash. xAn xindividual xwho xreceives xless xthan x$20
xper xmonth xof xtips xwhile xworking xone xjob xdoes xnot xhave xto xreport xthe xtip xincome
xto xhis xemployer, xbut xthe xincome xis xstill xsubject xto xfederal xincome xtax xand xmust
xbe xreported xon xthe xtaxpayer's xForm x1040.
Chaz xis xa xnaval xofficer xwho xwas xinjured xwhile xserving xin xa xcombat xzone. xHe xwas
xlater xawarded xVeterans xAffairs x(VA) xdisability xbenefits. xHow xare xthese xpayments
xreported xon xChaz's xtax xreturn?
A. x100% xof xthe xdisability xbenefits xmay xbe xexcluded xfrom xincome. x
B. xUp xto x50% xof xthe xdisability xbenefits xmay xbe xexcluded xfrom xincome. x
C. x100% xof xthe xdisability xbenefits xmay xbe xexcluded xfrom xincome xfor xenlisted
xpersonnel xbut xnot xfor xofficers.
D. xThe xdisability xbenefits xare xtaxable. x- xCorrect xAnswers x-A. xVA xDisability
xcompensation xis xexempt xfrom xtaxation, xif xthe xveteran xwas xterminated xthrough
xseparation xor xdischarged xunder xhonorable xconditions. xThe xVA xdoes xnot xissue
xform xW-2, xForm x1099-R, xor xany xother xtax-related xdocument xfor xveterans' xdisability
xbenefits.
Which xof xthe xfollowing xfringe xbenefits xis xtaxable x(or xpartially xtaxable) xto xthe
xemployee?
A. xHealth xinsurance xcovered xby x100% xby xthe xemployer
B. xEmployer-provided xparking xat x$275 xper xmonth
C. xGroup xterm xlife xinsurance xcoverage xof x$50,000
D. xEmployer xcontributions xto xan xemployee's x401(k) xplan. x- xCorrect xAnswers x-B.
xEmployer-provided xparking xis xan xexcludable xbenefit xof xup xto x$250 xper xmonth.
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