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Kaplan University AC 507 Unit 6 Quiz




Question;1. John has $120,000 of net income from his sole proprietorship in 2011. What is his deduction for AGI for self-employment taxes? (Points: 1) $8,478 $9,180 $4,239 $02. James owns 60% of the James and Peter Partnership. The partnership reports $300,000 of construction revenue, $120,000 of construction expenses, and $80,000 of other expenses that include $4,000 of doctor expenses paid for James, and a $6,000 charitable contribution. What is the bottom line net income reported on Jame's Schedule K-1? (Points: 1) $100,000 $104,000 $106,000 $110,0003. Mary has $30,000 of passive losses, $25,000 of passive gains, $27,000 of active income and $24,000 of active losses during the year. What is Mary's current year net taxable income or loss? (Points: 1) $2,000 loss $0 $3,000 income $5,000 income4. Will and Grace are equal partners in Will and Grace Partnership. Grace is employed full-time and receives a guaranteed salary from the partnership of $60,000 annually. If there is profit remaining after that salary, Will receives an allowance of $5,000 for his excess partner capital balance. Any remainder is divided equally among Will and Grace. If the accounting income before either of these payments is $80,000, what is the amount of income or loss allocated to Grace? (Points: 1) $60,000 $67,500 $12,500 $5,0005. Which of the following is not a requirement to make an S election? (Points: 1) Minimum of 2 shareholders Maximum of 100 shareholders One class of shareholdersd.It must be a domestic corporation6. Karen has a $30,000 basis in her 40% ownership in an S Corporation and lent the corporation $10,000 last year. The corporation has other debt outstanding of $60,000 during the entire year. This year the S Corporation reported a $200,000 loss. How much of this loss may Karen deduct? (Points: 1) $0 $80,000 $24,000 $40,0007. Williams Company is a S Corporation owned equally by Smith and Weston. Williams had taxable income of $60,000 for the current taxable year. Smith and Weston received distribution during the tax year of $20,000 each. What is Smith's taxable income from Williams Company for the current taxableyear? (Points: 1) $0 $20,000 $30,000 d.$50,0008. Joy purchased a 50% interest in an S corporation on April 1 of the current year and sells one-half of her interest on October 1. If the S corporation reported $40,000 of income for the year, what income does it report on Joy's Schedule K-1? (Points: 1) $20,000 $15,000 $12,548 $10,0009. Samantha and Ashley form the MAS General Partnership. Samantha contributed $20,000 cash in exchange for her 50 percent partnership interest. During the first year of partnership operations, the partnership reported net taxable income of $10,000, Samantha withdrew $8,000 cash from the partnership, and the partnership took out an $18,000 loan on the last day of the year. Samantha's adjusted basis for her partnership interest at year end is: (Points: 1) $38,000 $30,000 $26,000 $25,000 $20,000 $17,00010. Which of the following is not a characteristic of sole proprietorships? (Points: 1) Owners pay self-employment taxes Formation is always tax-free Distributions of entity income are tax-free Loss is recognized on liquidation


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