MENU
Darr, an employee of Sorce C corporation, is not a shareholder. Which of the following would be included in a taxpayer's gross income?
Suggested Answer: D
Get Premium CPA-Regulation Questions
as Interactive Web-Based Practice Test or PDF
Real Exam Format
Detailed Explanations
Instant Access
Get Your Practice Test
Choice 'd' is correct. An individual receiving common stock for services rendered must recognize the fair market value as ordinary income. Any dividends received on that stock would also result in income recognition.
Choice 'a' is incorrect. Employer-provided medical insurance is a tax-free fringe benefit.
Choices 'b' and 'c' are incorrect. Gifts and inheritances are both tax-free to the recipient. (Remember tax is often paid by the person giving the gift or the estate at death.)
12 comments · newest first
YE
Yen
3 days ago
A is tricky. Medical insurance isn't usually taxable, right?
DA
Daron
8 days ago
Agreed, D makes sense. It's for services rendered.
BL
Blondell
13 days ago
I think D is the right choice. Dividends are taxable income.
QU
Quentin
18 days ago
Totally agree with D), that makes sense!
HE
Helene
23 days ago
C) is not taxable until sold, though.
CA
Cathern
28 days ago
Surprised that gifts aren't taxable!
RO
Royal
1 month ago
I think A) is also not taxable, right?
HE
Hector
1 month ago
D) is definitely included in gross income.
FR
Francisca
1 month ago
Inherited property usually isn't taxed as income, so I think C is also not included. This is tricky!
GE
Germaine
2 months ago
I feel like employer-provided medical insurance is often excluded from gross income, so A should be safe too.
RO
Ronnie
2 months ago
I’m not entirely sure, but I think D might be the right answer since it’s income from services rendered, which usually counts.
CA
Caitlin
2 months ago
I remember that gifts are usually not included in gross income, so I think B is out.