[startupcfo]

***Taken from Simulation #5

Mrs. Wai Yan is a full-time employee for a local manufacturing company.
Note (2): Wai received 100 shares of stock when the company’s stock was trading at $30 per share.

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1. The answer key does not include the 3,000 of stock in Wai Yan’s wages. Why not?
https://www.law.cornell.edu/uscode/text/26/83

2. The answer key states Line 8a: The taxable interest income for Wai is $150 as provided in the income table from her savings account. Although accrued interest from a CD is included in gross income in the year earned and not in the year received for both cash and accrual taxpayers, there is an exception to this rule. Specifically, a taxpayer includes the interest in the year received and not the year earned from a debt instrument (i.e., a CD) if the instrument is for 12 months or less, which is the case for Wai. What code section is that?

3. There’s a $620 of qualified dividends . Why doesn’t the answer key also say there’s $620 of ordinary dividends as well? I thought qualified dividends were totally different and taxed at more favorable rates.

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