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ACCT 553-Question 1.1.(TCO E) Interest, dividends, and annuities income are classified as __ 16 mcq and 10 long ques




Question;Question 1.1.(TCO E) Interest, dividends, and;annuities income are classified as _____. (Points: 5);active incomepassive incomeportfolio incomeNone of the above;Question 2.2.(TCO D) Which of the following;is an example of a nontaxable, like-kind exchange? (Points: 5);Inventory for a locomotiveA printer for an office buildingLand for an office buildingThe trade of an apartment building for a computer;Question 3.3.(TCO H) Alex files a tax return;for the 2010 tax year. His adjusted gross income is $50,000. He had a net;investment income of $9,000. In 2010, he had the following interest;expenses.;Personal credit card interest: $4,000;Home mortgage interest: $8,000;Investment interest (on loans used to buy stocks): $15,000;What is the interest deduction for Alex for the 2010 tax year? (Points: 5);$27,000$8,000$17,000$18,000;Question 4.4.(TCO B) Mark Miller paid the;following medical expenses during the year (all in excess of;reimbursement).;Hospital and doctor bills (for self and wife): $840;Medicine and drugs (for self and wife): $730;Hospitalization insurance premiums: $6,200;Medicine and drugs (for dependent mother, age 71): $1,060;Assuming that Mark's adjusted gross income was $60,000, how much of a;medical-expense deduction may Mark claim on his return? (Points: 5);$4,170$6,200$4,330$8,830;Question 5.5.(TCO A) The following taxes were;paid by Adam Smith.;Real estate taxes on his home: $3,000;State income taxes: $900;Cigarette taxes: $500;State gasoline tax (personal use of automobile): $150;Social security tax (withheld from wages): $5,500;Penalty on tax underpayment: $800;In itemizing his deductions, what is the amount that Adam may claim as a;deduction for taxes? (Points;5);$3,900$4,550$3,050$10,850;Question 6.6.(TCO E) Josh sold a piece of;business equipment that had an adjusted basis to him of $50,000. In return;for the equipment, Josh received $90,000 cash and a painting with a fair;market value of $20,000 from the buyer. The buyer also assumed Josh's;$25,000 loan on the equipment. Josh paid $5,000 in selling expenses. What;is the amount of Josh's gain on the sale?(Points: 5);$90,000$135,000$75,000$80,000;Question 7.7.(TCO I) In October of;2011, David and Betty Bennett sold their residence;for $400,000. They purchased it in 2000 for $200,000. They made major;capital improvements during their 10-year ownership, which;totaled $80,000.;What is their recognized gain? (Points;5);$200,000$120,000$400,000$0;Question 8.8.(TCO I) Which of the following;entities may select any tax period (calendar or fiscal)? (Points: 5);Sole partnershipPartnershipS corporationsCorporations other than S corporations;Question 9.9.(TCO D) Tom Smith had a;short-term capital loss of $3,000 in 2010, a short-term capital gain of;$1,900, a short-term capital loss carryover from 2010 of $700, a long-term;capital gain of $1,800, and a long-term capital loss of $1,000. What is;Tom's deductible loss in 2010? (Points;5);$1,000$1,800$2,000$3,000;Question;10.10.(TCO;A) The term "Practice before the IRS" refers to _____. (Points: 5);tax planning for nonprofit organizationsmacro-economic tax projectionsrepresenting a client before the IRStax planning for timber and forest investments;Question;11.11.(TCO;F) To be deductible for tax purposes, a trade or business expenditure must;be _____.;(Points: 5);ordinarynecessaryordinary and necessaryordinary or necessary;Question;12.12.(TCO;A) Which of the following does not constitute tax evasion? (Points: 5);Arranging your affairs to keep your tax liability as low;as possible under the tax lawTrying to legitimately maximize profitsTrying to legitimately minimize tax liabilityAll of the above;Question;13.13.(TCO;C) Which of the following items is not subject to federal income tax? (Points: 5);The interest on U.S. Treasury bondsGambling winningsThe interest on loans made in the ordinary course of;businessLife insurance proceeds;Question;14.14.(TCO;B) Sam owes Bob $8,000. Bob cancels (forgives) the debt. The cancellation;is not a gift, and Sam is bankrupt. Which of the following statements is;correct concerning the impact of this transaction? (Points: 5);Both Bob and Sam recognize $8,000 of taxable income.Bob recognizes $8,000 of taxable income.Sam recognizes $8,000 of taxable income.Neither Bob nor Sam has any taxable income from this;transaction.;Question;15.15.(TCO;G) All of the following income items are includible in an employee's gross;income except _____. (Points;5);severance pay for the cancellation of employmentvacation allowancepayments from the employer while sicka medical insurance premium paid by the employer for the;employee and his or her spouse;Question;16.16.(TCO;F) Fines and penalties paid to the government for the violation of a law;are _____. (Points: 5);generally deductible for tax purposes as business expensesnot deductible for tax purposesdeductible if they are ordinary and necessarydeductible if they are reasonable in amount;1. (TCO E) Betty Jones files a return as a single;taxpayer. Items of income received by;Betty in 2011 were as follows.;Interest on savings account with Bank of America: $100;Interest on state income tax refund: $50;Gambling winnings: $4,800;Dividends from mutual life insurance company on life insurance policy: $1,000;Dividends from Better Auto Co. received on January 2, 2011: $875;The total dividends received on the life insurance policy do not exceed the;aggregate of the premiums paid to the company.;(a) How much should Betty include in her 2011 taxable income as interest?;(b) How much should Betty report as dividend income for 2011?;(c) How much should Betty include in taxable ?Other Income? for her state;lottery winnings?;(Points: 17);2. (TCO E) Distinguish between realized gains and losses and;recognized gains and losses. (Points;17);3.;(TCO F) When might a taxpayer prefer a sale;over a like-kind exchange that would result in the nonrecognition of gain under;Section 1031?(Points: 17);4.;(TCO;G) What is "significant participation," and why is it noteworthy?(Points: 17);5.(TCO I) Amos, a single individual with a salary;of $50,000, incurred and paid the following expenses during the year.;Medical expenses: $5,000;Alimony: $14,000;Casualty loss (after $100 floor): $1,000;State income taxes: $4,000;Moving expenses: $1,500;Contribution to a traditional IRA: $2,000;Student loan interest: $1,200;Analyze the above expenses and determine which ones are deductible for AGI.;Please support your position. (Points: 17);Question 6.6.(TCO I) Kim had the following transactions for 2010.;Salary: $48,000;Damage award (compensatory) for city bus accident: $18,000;Loss on sale of stock investment: $5,600;Loan from father to purchase auto: $14,000;Alimony paid to former husband: $8,000;What is Kim's AGI for 2010? (Points;17);Question 7.7. (TCO F) Pam;owns a sole proprietorship, and Kevin is the sole shareholder of a C;(regular) corporation. Each business sustained a $16,000 operating loss and a;$2,500 capital loss for the year. Evaluate how these losses will affect the;taxable income of the two owners. (Points: 17);8.(TCO B) Dave forms a corporation and transfers;property having a basis to him of $22,000 and a fair market value of $29,000 to;the corporation for 1,000 shares of $11 par stock. One year later, Hank;transfers property having a basis to him of $3,500 and a fair market value of;$4,500 for 100 shares of the stock. Hank is not related to Dave. The;corporation issued no other stock.;(a) How much gain does Dave recognize on his exchange? What is the basis to;Dave of his 1,000 shares?;(b) What gain or loss is recognized by the corporation when it issues its;shares to Dave? What is the basis to the corporation of the property it;received from Dave?;(c) What is the gain or loss that Hank recognizes on this transaction, and what;is his basis in his 100 shares?(Points: 17);Question;9.9.(TCO F) XYZ;Company had a net loss of $90,000 from operations in 2007. Tina owns XYZ and;works 20 hours a week in the business. She has a large amount of income from;other sources and is in the 33% marginal tax bracket. Would Tina's tax;situation be better if XYZ were a proprietorship or a C corporation? Explain;why. (Points: 17);10.(TCO H) Alex Smith purchased 30 shares of XYZ;stock on April 30, 2010 for $210, and on September 1, 2010, he purchased 90;additional shares for $900. On November 8, 2010, he sold 48 shares, which could;not be specifically identified, for $528, and on December 15, 2010, he sold;another 25 shares for $50. What is his recognized gain or loss? (Points: 17)


Paper#37782 | Written in 18-Jul-2015

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