Week 2 Homework Assn 1 
ACCT553
Week 2 Homework
Kameka Donley
_________________________________________________________
Please provide your answer to each question in the space provided below.
When finished, submit to the DropBox.
Chapter 4
1. Your brother is short on cash and cannot pay his rent this month. You pay his rent for him. Is this taxable income to your brother? Do you get a deduction? (2 pts)
No, this is not taxable income for my brother… The first $13,000 that my brother receives is considered a tax free gift, but any amount after that is taxable. So in this case I guess it would depend on just how much I paid in rent for my brother…was it just a onetime “gift” or if more than onetime, how much does it total in rent paid on his behalf. Do I get any deductions? No, I do not get a deduction; “gifts” are never deductible. A gift (paid rent for someone else) is not income to the recipient (my brother)… nor is it a deduction for the giver (me).
2. Which of the following items would be excluded from income? (a) $100 bill found under the sugar caddy at the restaurant (b) Inheritance of a car from your grandmother valued at $5,000. (c) Loan from your father-in-law to start your business, (d) Child Support received totaling $16,500. (4 pts)
The only two that are excluded from income are (b), (c) and (d)… (a) $100 found is the only thing considered as income. Inheritance is not, the loan is not because there were no specific terms agreed upon for repayment (no strings attached) and not on child support.
Chapter 5
3. Shaun & Kayla earned the following in 2013: Interest on a Savings account of $36, Interest on a U.S. Series EE Savings Bond of $25, Interest on a CD that has not matured yet of $20. How much taxable interest income must they report on their 2013 tax return? (4 pts)
Shaun & Kayla have taxable interest income of $61. However, the can elect to defer the recognition of income on the Series EE Savings Bond until the bond mature. In that case,
Week 2 Homework
Kameka Donley
_________________________________________________________
Please provide your answer to each question in the space provided below.
When finished, submit to the DropBox.
Chapter 4
1. Your brother is short on cash and cannot pay his rent this month. You pay his rent for him. Is this taxable income to your brother? Do you get a deduction? (2 pts)
No, this is not taxable income for my brother… The first $13,000 that my brother receives is considered a tax free gift, but any amount after that is taxable. So in this case I guess it would depend on just how much I paid in rent for my brother…was it just a onetime “gift” or if more than onetime, how much does it total in rent paid on his behalf. Do I get any deductions? No, I do not get a deduction; “gifts” are never deductible. A gift (paid rent for someone else) is not income to the recipient (my brother)… nor is it a deduction for the giver (me).
2. Which of the following items would be excluded from income? (a) $100 bill found under the sugar caddy at the restaurant (b) Inheritance of a car from your grandmother valued at $5,000. (c) Loan from your father-in-law to start your business, (d) Child Support received totaling $16,500. (4 pts)
The only two that are excluded from income are (b), (c) and (d)… (a) $100 found is the only thing considered as income. Inheritance is not, the loan is not because there were no specific terms agreed upon for repayment (no strings attached) and not on child support.
Chapter 5
3. Shaun & Kayla earned the following in 2013: Interest on a Savings account of $36, Interest on a U.S. Series EE Savings Bond of $25, Interest on a CD that has not matured yet of $20. How much taxable interest income must they report on their 2013 tax return? (4 pts)
Shaun & Kayla have taxable interest income of $61. However, the can elect to defer the recognition of income on the Series EE Savings Bond until the bond mature. In that case,