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Question;1.In 2014, KAKA invested $40,000 in a cattle-feeding partnership that used nonrecourse notes to purchase $30,000 of feed, which was used to feed the cattle and expensed.If KAKA?s share of the expense was $50,000, what is the most that KAKA can deduct in 2014?a. $10,000b. $30,000c. $40,000d. $50,0002.DJ, a corporate executive, exercised an incentive stock option (?ISO?) granted by DJ?s employer to purchase 10,000 shares of the corporation?s stock at the option price of $1 per share (i.e., the exercise price was $1 per share).The stock is freely transferable. At the time the option was exercised, the stock was selling for $51 per share.What is the AMT adjustment that results from DJs exercising the ISO (assume that DJ will NOT dispose of any of the stock during the year)?a. $0b. $10,000c. $500,000d. $510,0003.JENNY, a single parent, lives in an apartment with JENNY?s TWO minor children each under age 11, whom JENNY supports.For 2014, JENNY will have AGI and earned income of $19,000. Calculate the amount, if any, of JENNY?s earned income credit.a. $5,460b. $5,214c. $2,000d. $04.James and Analeyda are married and file a joint return. In 2014, Analeyda worked fulltime and earned $19,000, while James worked fulltime and earned $21,000. Assume their 2014 AGI equaled $40,000.Assume they incurred $11,000 of child care expenses during 2014 for their THREE dependent children Catherine, Mairovis and Maidelin (who are 2, 4 and 6 years old, respectively). What is their child and dependent care CREDIT amount?a. $1,320b. $3,000c. $6,000d. $11,0005.In 2007, Freda received stock from Eva worth $20,000 at the time of the GIFT. At the time of the gift, Eva?s adjusted basis in the stock was $30,000What is the gain or loss that Freda should report for 2014 if she sold the stock to Valerie in 2014 for $45,000 (ignore any gift tax that may have been paid on the transfer from Eva to Freda)?a. There is no gain or lossb. $45,000 gainc. $25,000 gaind. $15,000 gain6.Now, assume that in the previous question Freda sold the stock to Valerie for $5,000 (instead of $45,000). What is the gain or loss that Freda should report (again, ignore any gift tax that may have been paid on the transfer from Eva to Freda)?a. There is no gain or lossb. $5,000 gainc. $15,000 lossd. $25,000 loss7.Now, assume that in Question 5 Freda sold the stock to Valerie for $25,000 (instead of $45,000). What is the gain or loss that Freda realized on the sale to Valerie (again, ignore any gift tax that may have been paid on the transfer from Eva to Freda)?a. There is no gain or lossb. $5,000 lossc. $5,000 gaind. $25,000 gain8.KAKA traded in office equipment with an adjusted basis of $10,000 (and value of $25,000) for other (like-kind) office equipment then valued at $15,000. KAKA alsoreceived$10,000 in cash as part of the deal.What was KAKArecognizedgain on the exchange, if any?a. $0b. $10,000c. $15,000d. $25,0009.KAKA traded in computer equipment with an adjusted basis of $22,000 (and a value of $22,000) for other (like-kind) computer equipment then valued at $12,000. KAKA alsoreceived$10,000 in cash as part of the deal. What was KAKArealizedgain on the exchange, if any?a. $0b. $10,000c. $12,000d. $22,00010.In 2014, Tana and Danny sold a house to Babajide for $850,000. Prior the 2014 sale, neither Tana nor Danny had ever excluded a gain from the sale of a personal residence. Tana and Danny had lived in the house for the lastfive yearsand used it exclusively for personal purposes. Tana and Danny had purchased the house for $250,000. Tana and Danny started living in the house immediately after purchasing it and never made any capital improvements to the house or took any depreciation (or other deductions) against it. Assume there were no selling expenses. How much of a gain did Tana and Dannyrealizeon the sale to Babajide (assume that Tana and Danny are married and file a joint return)?a. $850,000b. $600,000c. $50,000d. $011.Assume the facts stated in the previous question. How much of a gain must Tana and Dannyrecognizeon the sale to Babajide?a. $850,000b. $600,000c. $50,000d. $012.In 2014, Estela will have taxable income of approximately $40,000. In 2014, Estela will also have a long-term capital loss of $14,000. Estela has no other capital gains or losses (in 2014 or prior years). For 2014, what is the maximum capital loss amount that Estela may use to offset her other income?a. $0b. $3,000c. $11,000d. $14,00013.Assume the facts stated in the prior question. Assume further that for 2014 Estela offset her wages (with her capital loss) to the maximum extent permitted by law. What is the amount of Estela?s capital loss carryover to 2015?a. $0b. $3,000c. $11,000d. $14,00014.JAVA is a single taxpayer in the 35% tax bracket. JAVA wants to minimize her 2014 tax liability. Which of the following provides the LARGEST tax benefit to JAVA (assume that she may legally take advantage of each item in its entirety for 2014)?a. A $5,000 deduction from adjusted gross incomeb. A $10,000 deduction from gross incomec. A $1,000 tax creditd. Options ?b? and ?c? would provide the same amount of tax benefit15.What was the MAXIMUM EARNED INCOME CREDIT amount that Christopherand Ellice could possibly take for 2014? Assume they are U.S. taxpayers filing a joint return with ONE qualifying child.a. $0b. $1,000c. $3,000d. $3,30516.Which item MOST resembles an interest freeloanfrom the U.S. government?a. The American Opportunity tax creditb. The earned income creditc. The child tax creditd. First-time homebuyer credit for a closing that occurred in June of 200817.In early 2014, ANN sold her personal residence to Myrtho for $500,000. At the time of the sale, ANN?s adjusted basis was $200,000. Within three months of the sale, Amy moved into a new residence she purchased for $600,000. What is ANN basis in hernewresidence?a. $200,000b. $300,000c. $550,000d. $600,00018.Which of the following is TRUE?a. When compared to deferrals, exclusions are more permanent in natureb. Section 1031 provides for an elective deferral upon certain exchangesc. When compared to exclusions, deferrals are more permanent in natured. All of the above19.GANDOO business property (located in JAWA County) was condemned by the proper local authorities. Immediately before the condemnation, the property had a fair market value of $400,000 and GANDOO adjusted basis in the property was $200,000. The local authorities replaced GANDOO condemned property with similar JAWA County property having a fair market value of $300,000. What is GANDOOsrealizedgain or loss relating to these matters?a. $0b. Gain of $300,000c. Gain of $100,000d. Loss of $100,00020.Assume the facts stated in the prior question. What is GANDOOrecognizedgain or loss relating to such matters?a. $0b. Gain of $300,000c. Gain of $100,000d. Loss of $100,00021.Assume the facts stated in the prior two questions. What is GANDOO basis in the JAWA County property she received as a result of the condemnation (i.e., what is Catherine?s basis in thenewly acquiredproperty)?a. $0b. $200,000c. $300,000d. $400,00022.In 2014, Mairovis and Kevin sold a house to Jose for $700,000. Mairovis and Kevin had purchased the house for $800,000 in 2005 (during the real estate boom). Mairovis and Kevin started living in the house immediately after purchasing it and never made any capital improvements to it or took any depreciation (or other deductions) against it. Assume there were no selling expenses. How much of a LOSS may Mairovis and Kevinrecognizeon the sale to Jose (assume that Mairovis and Kevin are married and file a joint return and itemize deductions)?a. $100,000b. $100,000 less 10% of their AGIc. $99,900 less 10% of their AGId. $023.Santosh purchased land for $70,000 in 1988. The land was valued at $1,000,000 on June 1, 2014, when Santosh died. Santosh?s relative Jean inherited the land. What basis would Jean have in the land as a result of the inheritance?a. $0b. $70,000c. $1,000,000d. Santosh?s adjusted basis on June 1, 2014 (if different than $70,000)24.Assume the same facts stated in the previous question. Which of the following is most likely TRUE, if Jean sold the land in September 2014 for $1,200,000?a. Jean?s 2014 gain is short-termb. Jean?s 2014 gain is long-termc. In 2014, Jean should ?recapture? any depreciation previously taken by Santosh on the landd. In 2014, Jean will be taxed on the appreciation that occurred while Santosh held the land (provided that such appreciation was previously not taxed)25.Which of the following statements is most likely TRUE for Joel (a typical individual taxpayer in the 35% tax bracket)?a. Joel usually prefers ordinary losses to capital lossesb. Joel usually prefers ordinary income to long-term capital gainsc. Joel usually prefers a $200 credit to a $1,000 deductiond. Both ?a? and ?b? are correct26.JOHN, who owns and operates an ICE CREAM SHOP as a sole proprietor, has the following property:? STOCKS held for Matthew?s investment? Elaborate ice cream making EQUIPMENT that was inherited from Maidelin(Matthew?s grandmother) (it is used exclusively in the ICE CREAM SHOP)? CHAIRS that are used exclusively in Matthew?s home? a COMPUTER used exclusively in the ICE CREAM SHOPConsidering the above items, which option below lists the capital asset(s) under Section 1221?a. Only the STOCKSb. Only the STOCKS & CHAIRSc. Only the EQUIPMENT, CHAIRS & COMPUTERd. Each of the above assets is a capital asset under Section 122127.JANA recently purchased a piece of land, a building and a truck for a lump sum of $1,000,000. The fair market value of the land was $500,000, the fair market value of the building was $650,000, and the fair market value of the truck was $50,000. What is Obaku?s basis in the TRUCK?a. $0b. $41,667c. $50,000d. $333,33328.On September 1, 2001, Jose paid $550 for 1,000 shares of TXX-5761 Inc. common stock. On August 13, 2014, Jose received anontaxable10% common stock dividend (i.e., 100 additional shares of identical common stock). On August 13, 2014, TXX5761 Inc. the common stock was trading on the market for $10 a share. On October 15, 2014, Jose sold the 100 shares he received on August 13, 2014 to Joel. What is thebasisof the 100 shares Jose sold to Joel?a. $1,000b. $55c. $50d. $029.Refer to the facts stated in the prior question. Any gain resulting from the October 15, 2014 sale to Joel will most likely be:a. Short-termb. Long-termc. Both short-term and long-termd. Neither short-term nor long-term30.In 2014, SANA sold a piece of equipment from SANAS business for $400,000. The equipment was purchased in 2010 for $240,000. Assume total of $168,000 depreciation was taken (prior to the sale). What is SANAS?srecognizedgain on the sale?a. $400,000b. $328,000c. $168,000d. $160,00031.Refer to the facts stated in the prior question. What amount of the gain (at least) will be recaptured at SANAS?s ordinary income rate?a. $400,000b. $328,000c. $168,000d. $160,00032.Refer to the facts stated in the prior two questions. What amount of the gain will be treated as Section 1231 gain and (possibly) taxed at the long-term capital gain rate?a. $400,000b. $328,000c. $168,000d. $160,00033.Which of the following is most likely Section 1245 property (assume that each item has been held long-term and is used in a trade or business)?a. Office Equipmentb. Inventoryc. Office Buildingd. Land34.Which of the following would MOST LIKELY require an adjustment for the alternative minimum tax?a. A gambling lossb. A charitable contribution deductionc. A deduction for state income taxesd. Each of the above items requires an adjustment for the alternative minimum tax35.Which of the following is most likely Section 1231 property (assume that each item has been held long-term and is used in a trade or business)?a. Section 1250 propertyb. Section 1245 propertyc. Landd. Each of the above items is Section 1231 property36.Danny was at risk for $40,000 in Partnership X and $30,000 in Partnership Z onJanuary 1, 2014. Both partnerships are passive activities to Danny (these areDanny?s only passive activities). Danny?s share of net income from Partnership X during 2014 is $10,000. Danny?s share of losses from Partnership Z during 2014 is $50,000. How much is Dannyat riskfor Partnership X on January 1, 2015?a. $50,000b. $40,000c. $10,000d. $037.Refer to the facts in the previous question. How much is Dannyat riskfor Partnership Z on January 1, 2015a.$80,000b. $50,000c. $20,000d. $038.Refer to the facts in the previous questions. What is Danny?scarryover under theat-risk rulesfor Partnership Z in 2014?a. $80,000b. $50,000c. $20,000d. $039.Refer to the facts in the previous question. What is Danny?sdeductible lossfor Partnership Z in 2014?a. $50,000b. $30,000c. $10,000d. $040.Refer to the facts in the previous question. What is Danny?ssuspended loss underthepassive loss rulesfor Partnership Z in 2014?a. $50,000b. $30,000c. $20,000d. $041.In 2014, Jeanette invested in the ANALEYDA Limited Partnership (?ANALEYDA L.P.?) by paying $70,000 cash and contributing additional assets worth $10,000 (and having a basis equal to $5,000 on the date of the contribution). What amount didJeanette have at risk in ANALEYDA L.P. as of January 1, 2015, if ANALEYDAL.P. broke even in 2014 (i.e., if ANALEYDA L.P. had no income or loss in 2014)?a. $5,000b. $70,000c. $75,000d. $80,00042.Refer to the facts stated in the prior question. But, for this question, assume thatANALEYDA L.P. allocated to Jeanette net income of $20,000 from operations in 2014. What amount does Jeanette have at risk in ANALEYDA L.P. as of January 1, 2015?a. $25,000b. $55,000c. $95,000d. $100,00043.In 2014, Tana and Kevin (who file a joint return) had an interest expense of $6,000 on a loan that was used to purchase a variety of stock and bonds (all producing taxable income). Assume further that, in 2014, Tana and Kevin had net investment income of $4,000. Assume they itemize deductions, what is their maximum interest expense deduction in 2014?a. $6,000b. $4,000c. $3,000d. $044.Assume that Christopher and Eva file a joint return and have the following items for 2014:Taxable income: $75,000Positive adjustments: $30,000Preferences: $45,000Regular tax ability: $10,463What was their 2014 AMT?a. $17,654b. $10,463c. $7,191d. $045.Assume that a couple that filed a joint return had 2014 AMTI of $375,000. What was the amount of their actual 2014 exemption for the AMT?a. $0b. $7,900 (i.e., $3,950 x 2)c. $27,475d. $82,10046.GANDOO is negotiating to buy land from JAVA. What will GANDOO basis be in the land, if GANDOO gives JAVA $100,000 and GANDOO assumes JAVA mortgage on the land of $30,000?a. $130,000b. $100,000c. $70,000d. $30,00047.Which of the following is LEAST likely to qualify as a like-kind exchange under Section 1031 (assume all of the assets are used for business)?a. Improved real estate for computer equipmentb. Improved real estate for unimproved real estatec. Office building for a warehoused. Office furniture for office equipment48.Valerie exchangesundevelopedreal estate fordevelopedreal estate on July 30, 2014. On July 30, 2014, the fair market value of each property is $500,000. Valerie had purchased the undeveloped real estate on February 14, 2004, for $300,000. Both properties are considered investment property for Valerie. Which of the following isFALSE?a. Valerie will realize a gain of $200,000 from the July 30, 2014 transactionb. Valerie will recognize a gain of $200,000 from the July 30, 2014 transactionc. Valerie?s basis in the developed real estate is $300,000d. If Valerie sells the developed real estate in June of 2015 for a gain, the gain will most likely be treated as a long-term gain49.In October 2014, JAVA purchased a playground set at a garage sale for $100. JAVA is not in the business of buying and selling anything. JAVA researched the playground set online and discovered it was worth $700. In November 2014, JAVA sold the playground set through an auction website for that amount (i.e., $700). Which of the following is TRUE considering these transactions?a. JAVA does not have any incomeb. Had JAVA sold the playground set for $25, JAVA could have deducted a $75 ordinary lossc. JAVA has a $600 short-term capital gaind. JAVA has a $600 long-term capital gain50.JAVA had the following net Section 1231 results for each of the years shown below.Tax YearNet Section 1231 LOSSNet Section 1231 GAIN2009$0$02010$0$02011$0$02012$5,0002013$15,0002014$30,000Which of the following is TRUE regarding the net Section 1231 gain in2014?a. Only $10,000 of the $30,000 will be taxed at JAVA ordinary income rateb. Only $20,000 of the $30,000 will be taxed at JAVA ordinary income ratec. All $30,000 will all be taxed at JAVA ordinary income rated. All $30,000 will all be taxed at JAVA long-term capital gain rate

 

Paper#38407 | Written in 18-Jul-2015

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