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AC 280 Tax Preperation Study Guide Problems




Question;41. Joaquin did not have any money to pay his $2,000 tax;liability on April 15, so he did not file his tax return. He finally filed the;return in July and paid $1,000 of the tax due. He paid the remaining tax due in;October. What is his total penalty?;42. Teddy, a single man, has $5,000 of taxable dividends;$3,000 of interest income from State of Oredgon bonds, a $5,000 long-term;capital gain, and $9,000 of social Security income. What is Teddy's adjusted;gross income?;43.Cargo company offers its employee a cafeteria plan. Julie;is allotted $5,000 to spend a fringe benefits. She chooses a health insurance;plan that costs $2,500 per year, a $50,000 whole life insurance policy with a;$500 annual premium, and the remaining $2,000 she uses for the company's child;and dependent care program. What is Julie's taxable compensation if her salary;is $42,000?;44. George took a customer to dinner where they discussed;business and then to a play. He spent $80 for the meal and left a $15 tip. Cab;fare to the theater was $10, and George paid a scalper $200 for the two play;tickets with a face value of $80 each. What is George's allowable deduction for;these expenses?;45. Determine the amount of capital gain or loss in each the;following transactions and state whether the gain or loss is long-term or;short-term.;a. 100 share of Bilco bought for $8,000 on January 22 of;year 3 and sold for $10,000 on January 22 of year 4.;b. 20 acres of investment land bought for $8,000 on January;31 of year 3 and sold for $7,000 on February 2 of year 4.;c. 150 shares of Data stock bought for $15,000 on April 1 of;year 2 and sold for $17,000 on May 28 of year 4.;46. Sarah's building is condemned by the State on October;19,2005. The building has a basis of $400,000 and Sarah receives $600,000 from;the state on February 10,2006. On January 20,2008 Sarah purchases qualifying;replacement property for $565,000. What is Sarah's realized and recognized gain;for loss on the condemnation?;47. Clarence receives a liquidating distribution of;receivables (fair market value and basis both == $20,000) and land (fair market;value = $25,000 and basis = $18,000) for his partnership interest with a;$70,000 basis in a liquidating distribution. What is Clarence's realized and recognized;gain or loss on this distribution and his basis in the property received?;48. Seth and Clara have three dependent children ages two;six and 10. They have AGI of $119,250 in 2005. What is their allowable child;tax credit?;49. Sam and Judy married last year. Sam is very wealthy and;had Judy sign a prenuptial agreement. Judy did not want a family, but Sam;promised to put $1,000,000 in a bank account solely in her name if she has a;child. Judy agrees and gives birth to a child one year later. Sam put the;$1,000,000 in Judy's bank account. Is this a taxable gift? Explain.;50. In 2005, Boris put $2,000,000 in a irrevocable trust for;his great grandson. What amount of tax will Boris have to pay because of his;transfer?


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