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14. Ayla, age 17, is claimed by her parents as a dependent. During 2023, she had interest income from a bank savings account of $2,000 and income from a part-time job of $4,200. Ayla's taxable income is: a. $4,200$4,600=$0. b. $6,200$4,600=$1,600. c. $6,200$13,580=$0. d. $6,200$4,200=$2,000. 15. The annual increase in the cash surrender value of a life insurance policy: a. Is taxed when the individual dies and the heirs collect the insurance proceeds. b. Must be included in gross income cach year under the original issue discount rules. c. Reduces the deduction for life insurance expense. d. Is not included in gross income each year because of the substantial restrictions on gaining access to the policy's value. 16. Office Palace, Inc, signed a contract to lease an all-in-one printer to a new customer, Ashley, on December 27,2023. The contract called for rent of $600 per month for a period of 36 months beginning January 1,2024 . Ashley was required to pay the first and last month's rent at the time the lease was signed. Ashley was also required to pay a \$1,500 damage deposit. Office Palace must recognize as income for the lease: a. 50 in 2023, if Office Palace is an accrual basis taxpayer. b. $7,800 in 2024 , if Office Palace is a cash basis taxpayer. c. $2,700 in 2023 , if Office Palace is a cash or accrual basis taxpayer. d. $1,200 in 2023. 17. Albert had a terminal illness that would require almost constant nursing care for the remaining two years of his estimated life, according to his doctor. Albert had a life insurance policy with a face amount of $100,000. He had paid $25,000 of premiums on the policy. The insurance company has offered to pay him $80,000 to cancel the policy. although its cash surrender value was only $55,000. He accepted the $80,000. Albert used $15,000 to pay his medical expenses. Albert made a miraculous recovery and lived another 20 years. As a result of cashing in the policy: a. Albert must recognize $55,000 of gross income, but he has $15,000 of deductible medical expenses. b. Albert must recognize $65,000 ( $80,000$15,000) of gross income. c. Albert must recognize $40,000($80,000$25,000$15,000) of gross income. d. Albert is not required to recognize any gross income because of his terminal illness. 18. Peggy is an executive for the Tan Fumiture Manufacturing Company. She purchased furniture from the company for $9,500, the price Tan ordinarily would charge a wholesaler for the same items. The retail price of the furniture was $12,500, and Tan's cost was $9,000. The company also paid for Peggy's parking space in a garage near the office. The parking fee was $600 for the year. All employees are allowed to buy fumiture at a discounted price comparable to that charged to Peggy. However, the company does not pay other employecs' parking fees. Peggy's gross income from the above is: a. $0. b. $600. c. $3,500. d. 54,100 . c. None of a-d is correct

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