1. Which of these entities is taxed directly on its income?
2. Which of the following best describes vertical equity?
3. What is a corporation’s annual deduction for capital losses?
4. What is George’s gross income if he has the following: Salary = $78,000; Dividends = $4,000; interest on city of San Francisco bonds = $2,000; a gain of $14,000 on a stock sale and a $4,000 loss on a small sole proprietorship that he owns.
5. What is the marginal tax rate for a single individual with $60,000 of taxable income?
6. How much tax can be saved if John shifts $1,900 of income to his 18 year old dependent son? John is in the 25 percent tax bracket and his son has no other taxable income in 2012.
7. The primary source of tax authority that provides explanations, definitions, and examples of tax laws is the
8. A decision in the small case division of the Tax Court can be appealed only to
9. The statute of limitations for a return that inadvertently overstates expenses by 30 percent of gross revenues is
10. Sheryl sold 100 shares of ABC stock for $2,100 and 300 shares of XYZ stock for $8,900. She purchased the ABC stock four years ago for $1,200 and the XYZ stock two years ago for $9,100. What is the net effect of these sales on Sheryl’s income?
11. Abdo Corporation received permission to change its tax year-end from December 31 to August 31 in 2012. Its income from January 1 through August 31 is $278,000. What is Abdo’s tax liability?
12. Chloe owns 200 shares of TPP stock that she purchased 10 years ago for $1,500. Five years ago, there was a 3 for 2 stock split and she received 100 additional shares. This year, there was another 3 for 2 stock split and she received 150 additional shares. If the stock is currently selling for $10 per share, what is her income and what is her basis in these last 150 shares?
13. To whom do the doctrines of constructive receipt and claim of right apply?
14. Which of the following statements is correct?
15. James owns a sole proprietorship. James pays his son Albert, age 17, $8,000 and his daughter Chloe, age 19, $11,000 for their work in the business. Both wages are reasonable for the work they perform. How much FICA tax must the sole proprietorship pay on the wages?
16. What are Susie’s deductible moving expenses for 2012 if she spends $4,000 for packing and moving household goods, $1,200 to break the lease on her apartment, and $1,500 to store the household goods for 45 days? In April she drove her car 1,400 miles to her new home and spent $250 for motels and $80 for meals while traveling to the new home.
17. Which of the following are characteristics of a traditional IRA?
18.To deduct bad debt expense for tax purposes, the taxpayer must use:
19. Which of the following may qualify as a deductible business expense?
20. Waldo bought two tickets for a Packers game on Ebay for $400. The tickets had a face value of $50 each. He took a client to the game and they had a dinner afterwards where they discussed business. The cost of the dinner was $70. What is Waldo’s deduction for these expenses?
21. Which of the following is an additional requirement for employees to deduct expenses of a home office?
22. The adjusted basis of an asset is:
23. Useful lives for realty include all of the following except:
24.Momee Corporation, a calendar-year corporation, bought only one asset in 2007, a crane it purchased for $700,000 on November 24. It disposed of the asset in April, 2012. What is its depreciation deduction for this asset in 2012 if cost recovery was determined using only regular MACRS?
25. Research and experimentation expenditures can be:
26. Sheldon had salary income of $40,000. In addition, he had the following gains and losses on his property transactions: Long-term capital gain = $14,000; long-term capital loss = $6,000; short-term capital gain = $4,000; short-term capital loss = $8,000. If Sheldon has no other income items, what is his total income before any deductions for the year?
27.Cliff owned investment stock purchased three years ago for $16,000 and bonds purchased six months ago for $9,800. When he needed money recently, he sold the stock for $13,800 and the bonds for $10,100. What is the amount and type of net gain or loss that Cliff will include in computing his taxable income?
28. Ginger sold stock that she had purchased five years ago for $15,000 to her brother, Carl, for $12,000. Next month, Carl sold the stock for $11,000. What is the amount and type of gain or loss included in Carl’s income from this sale?
29.Shawn, a single taxpayer, sold the house he has lived in for seven years for $700,000. He purchased the house for $285,000. He made improvements at a cost of $125,000 and paid a $30,000 commission on the sale. What are Shawn’s realized and recognized gains on the sale?
30. Cal exchanges office furniture (fair market value = $100,000; adjusted basis = $90,000) and a business auto (fair market value = $10,000; adjusted basis = $6,000) for fire retardant filing cabinets (fair market value = $110,000; adjusted basis = $80,000). How much gain or loss does Cal recognize on the exchange?
31. Which of the following would not be considered an involuntary conversion?
32. What is the amount of the casualty loss on a business truck that had a fair market value of $14,000 before an accident and $4,000 after an accident, if its adjusted basis is zero?
33. Cal contributes property valued at $50,000 (adjusted basis = $30,000) to a partnership in exchange for a partnership interest valued at $40,000 and $10,000 cash. What is Cal’s recognized gain or loss on these transfers?
34. A corporation that owns 72 percent of all the outstanding stock of another corporation:
35.Soho is a personal service corporation that has $1,100,000 of gross revenue and $1,021,000 of deductible expenses? What is its income tax liability?
36. The Shepherd Corporation has $40,000 of taxable income, $200,000 of positive adjustments, and a $10,000 preference item. What is its alternative minimum taxable income?
37. What is JJ Corporation’s balance in accumulated earnings and profits at the beginning of year 2 if in year 1 it made a $40,000 distribution to its shareholders, its current earnings and profits was $35,000, and its accumulated earnings and profits was $25,000 at the beginning of year 1?
38.Sam has $80,000 of net income from his sole proprietorship in 2012. What is his deduction for AGI for self-employment taxes?
39. Which of the following is not a separately stated item on a partnership’s Schedule K?
40. Material participation includes all of the following except:
41.Stewart is a 30 percent general partner in STP Partnership. His basis in his partnership interest at the beginning of the year was $40,000. During the year, the partnership reported a $30,000 loss and paid off a $120,000 recourse debt. What is Stewart’s year-end basis in his partnership interest?
42.When does a partner recognize gain on a distribution?
43. Mary purchased 40 percent of an S corporation on February 28 of the current year and sells a 20 percent interest on November 30. If the corporation reports $10,000 of income for the year, what income does it report on Mary’s Schedule K-1.
44.What is Cheryl’s AGI if she has a taxable salary of $34,000, receives $6,000 of alimony and $600 of interest on her various savings accounts, contributes $3,000 to her traditional IRA, and paid a $100 penalty for cashing in her Certificates of Deposit early?
45.John and Mary have two children, Anna, age 16, and Tammy, age 21. Anna works after school and earned $4,000 in 2012. Tammy works 30 hours per week and is a part-time student at the local community college. She earned $8,400 in 2012. John’s mother also lives with them; she receives $7,800 in Social Security and $2,000 in interest income from some bonds. John and Mary provide over $10,000 towards her support. How many dependency exemptions may John and Mary claim on their joint tax return?
46.Toni is 61 and blind; her husband, Saul, is 67. What is their standard deduction if they file a joint tax return and what is the minimum amount of income they must have to be required to file a tax return, respectively?
47.Vera and Jake, a married couple with AGI of $321,000 for 2012, have $20,000 of mortgage interest, $8,000 of unreimbursed medical expenses, $4,000 of property taxes, and $9,000 of charitable contributions. How much may they claim for itemized deductions in 2012?
48.The annual gift tax exclusion
49. Cheryl bought some stock for $110,000. Two years later, she gave the stock to her brother, Harold, when its value was $100,000. Three years later, Harold sold the stock for $105,000. What is the value of the gift to Harold, and his gain or loss on the sale, respectively?
50. When will an insurance policy on the decedent’s life be included in a decedent’s gross estate?
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