On March 1, 2004, Leo leases and places in service a passenger automobile. The lease will run for five years and the payments are $380 per month. During 2004, he uses his car 80% for business and 20% for personal activities. Assuming the dollar amount from the IRS table is $19, determine Leo’s inclusion amount.
a.$0.
b.$10.
c.$13.
d.$15.
e.$19.
3.On June 30, 2004, Jill, a cash basis taxpayer, gave Tina a bond with a $25,000 face amount that pays $2,500 interest each December 31. When Tina collected the interest on December 31, 2004:
a.Jill must include all of the interest in her gross income.
b.Tina must include all of the interest in her gross income.
c.Jill must report $1,250 interest income, and Tina must report $1,250 interest income.
d.Jill must recognize $1,250 of interest income at the time of the gift.
e.Tina must recognize $25,000 of income at the time of the gift.