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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. $10,000;b. $30,000;c. $40,000;d. $50,000;2.;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. $0;b. $10,000;c. $500,000;d. $510,000;3.;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. $5,460;b. $5,214;c. $2,000;d. $0;4.;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. $1,320;b. $3,000;c. $6,000;d. $11,000;5.;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 $30,000;What 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 loss;b. $45,000 gain;c. $25,000 gain;d. $15,000 gain;6.;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 loss;b. $5,000 gain;c. $15,000 loss;d. $25,000 loss;7.;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 loss;b. $5,000 loss;c. $5,000 gain;d. $25,000 gain;8.;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 also received;$10,000 in cash as part of the deal.;What was KAKA;recognized;gain on the exchange, if any?;a.;$0;b.;$10,000;c.;$15,000;d.;$25,000;9.;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 also received;$10,000 in cash as part of the deal.;What was KAKA realizedgain on the exchange, if any?;a.;$0;b.;$10,000;c.;$12,000;d.;$22,000;10.;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;last five years and 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 Danny realize on the sale to Babajide (assume;that Tana and Danny are married and file a joint return)?;a.;$850,000;b.;$600,000;c.;$50,000;d.;$0;11.;Assume the;facts stated in the previous question.;How much of a gain must Tana and Danny recognize on the sale to;Babajide?;a.;$850,000;b.;$600,000;c.;$50,000;d.;$0;12.;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.;$0;b.;$3,000;c.;$11,000;d.;$14,000;13.;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.;$0;b.;$3,000;c.;$11,000;d.;$14,000;14.;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 income;b.;A $10,000 deduction from gross income;c.;A $1,000 tax credit;d.;Options ?b? and ?c? would provide the same amount of tax;benefit;15.;What was the;MAXIMUM EARNED INCOME CREDIT amount that Christopher;and;Ellice could possibly take for 2014?;Assume they are U.S. taxpayers filing a joint return with ONE qualifying;child.;a.;$0;b.;$1,000;c.;$3,000;d.;$3,305;16.;Which item;MOST resembles an interest free loan;from the U.S. government?;a.;The American Opportunity tax credit;b.;The earned income credit;c.;The child tax credit;d.;First-time homebuyer credit for a closing that occurred in;June of 2008;17.;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 her new residence?;a.;$200,000;b.;$300,000;c.;$550,000;d.;$600,000;18.;Which of the;following is TRUE?;a.;When compared to deferrals, exclusions are more permanent in;nature;b.;Section 1031 provides for an elective deferral upon certain;exchanges;c.;When compared to exclusions, deferrals are more permanent in;nature;d.;All of the above;19.;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 GANDOOs realized gain or loss relating;to these matters?;a.;$0;b.;Gain of $300,000;c.;Gain of $100,000;d.;Loss of $100,000;20.;Assume the;facts stated in the prior question. What;is GANDOO recognized;gain or loss relating to such matters?;a.;$0;b.;Gain of $300,000;c.;Gain of $100,000;d.;Loss of $100,000;21.;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 the newly;acquiredproperty)?;a.;$0;b.;$200,000;c.;$300,000;d.;$400,000;22.;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 Kevin recognize;on the sale to Jose (assume that Mairovis and Kevin are married and file a;joint return and itemize deductions)?;a.;$100,000;b.;$100,000 less 10% of their AGI;c.;$99,900 less 10% of their AGI;d.;$0;23.;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.;$0;b.;$70,000;c.;$1,000,000;d.;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-term;b.;Jean?s 2014 gain is long-term;c.;In 2014, Jean should ?recapture? any depreciation previously;taken by Santosh on the land;d.;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 losses;b. Joel usually;prefers ordinary income to long-term capital gains;c. Joel usually;prefers a $200 credit to a $1,000 deduction;d. Both ?a? and;?b? are correct;26.;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 SHOP;Considering;the above items, which option below lists the capital asset(s) under Section;1221?;a.;Only the STOCKS;b.;Only the STOCKS & CHAIRS;c.;Only the EQUIPMENT, CHAIRS & COMPUTER;d.;Each of the above assets is a capital asset under Section;1221;27.;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. $0;b. $41,667;c. $50,000;d. $333,333;28.;On September;1, 2001, Jose paid $550 for 1,000 shares of TXX-5761 Inc. common stock. On August 13, 2014, Jose received a nontaxable10% 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 the basis of the 100 shares;Jose sold to Joel?;a.;$1,000;b.;$55;c.;$50;d.;$0;29.;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-term;b.;Long-term;c.;Both short-term and long-term;d.;Neither short-term nor long-term;30.;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?s;recognized;gain on the sale?;a.;$400,000;b.;$328,000;c.;$168,000;d.;$160,000;31.;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.;$400,000;b.;$328,000;c.;$168,000;d.;$160,000;32.;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.;$400,000;b.;$328,000;c.;$168,000;d.;$160,000;33.;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 Equipment;b.;Inventory;c.;Office Building;d.;Land;34.;Which of the;following would MOST LIKELY require an adjustment for the alternative minimum;tax?;a.;A gambling loss;b.;A charitable contribution deduction;c.;A deduction for state income taxes;d.;Each of the above items requires an adjustment for the;alternative minimum tax;35.;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 property;b.;Section 1245 property;c.;Land;d.;Each of the above items is Section 1231 property;36.;Danny was at;risk for $40,000 in Partnership X and $30,000 in Partnership Z on;January 1;2014. Both partnerships are passive;activities to Danny (these are;Danny?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;Danny at risk for Partnership X on January;1, 2015?;a. $50,000;b. $40,000;c. $10,000;d. $0;37.;Refer to the;facts in the previous question. How much;is Danny at risk for Partnership Z on;January 1, 2015a.$80,000;b.;$50,000;c.;$20,000;d.;$0;38.;Refer to the;facts in the previous questions. What is;Danny?s carryover under the at-risk rules for Partnership Z in 2014?;a.;$80,000;b.;$50,000;c.;$20,000;d.;$0;39.;Refer to the;facts in the previous question. What is;Danny?s deductible loss for Partnership Z;in 2014?;a.;$50,000;b.;$30,000;c.;$10,000;d.;$0;40.;Refer to the;facts in the previous question. What is;Danny?s suspended loss under the passive;loss rules for Partnership Z in 2014?;a.;$50,000;b.;$30,000;c.;$20,000;d.;$0;41.;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 did;Jeanette;have at risk in ANALEYDA L.P. as of January 1, 2015, if ANALEYDA;L.P. broke;even in 2014 (i.e., if ANALEYDA L.P.;had no income or loss in 2014)?;a.;$5,000;b.;$70,000;c.;$75,000;d.;$80,000;42.;Refer to the;facts stated in the prior question. But;for this question, assume that;ANALEYDA;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.;$25,000;b.;$55,000;c.;$95,000;d.;$100,000;43.;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.;$6,000;b.;$4,000;c.;$3,000;d.;$0;44.;Assume that;Christopher and Eva file a joint return and have the following items for 2014;Taxable;income: $75,000;Positive;adjustments: $30,000;Preferences;$45,000;Regular tax;ability: $10,463;What was;their 2014 AMT?;a. $17,654;b. $10,463;c. $7,191;d. $0;45.;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. $0;b. $7,900;(i.e., $3,950 x 2);c. $27,475;d. $82,100;46.;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. $130,000;b. $100,000;c. $70,000;d. $30,000;47.;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 equipment;b. Improved;real estate for unimproved real estate;c. Office;building for a warehouse;d. Office;furniture for office equipment;48.;Valerie;exchanges undeveloped real estate for;developed real 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 is;FALSE?;a. Valerie will;realize a gain of $200,000 from the July 30, 2014 transaction;b. Valerie will;recognize a gain of $200,000 from the July 30, 2014 transaction;c. Valerie?s;basis in the developed real estate is $300,000;d. 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 gain;49.;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 income;b. Had JAVA;sold the playground set for $25, JAVA could have deducted a $75 ordinary loss;c. JAVA has a;$600 short-term capital gain;d. JAVA has a;$600 long-term capital gain;50.;JAVA had the;following net Section 1231 results for each of the years shown below.;Tax Year;Net Section 1231 LOSS;Net Section 1231 GAIN;2009;$0;$0;2010;$0;$0;2011;$0;$0;2012;$5,000;2013;$15,000;2014;$30,000;Which of the following is TRUE;regarding the net Section 1231 gain in 2014?;a. Only $10,000;of the $30,000 will be taxed at JAVA ordinary income rate;b. Only $20,000;of the $30,000 will be taxed at JAVA ordinary income rate;c. All $30,000;will all be taxed at JAVA ordinary income rate;d. All $30,000;will all be taxed at JAVA long-term capital gain rate

 

Paper#38997 | Written in 18-Jul-2015

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