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Question;63. Frederick Tims, a single individual, sold the following;investment assets in 2011.;If Frederick's taxable income before considering the above;sales is $100,000, compute his taxable income;and regular tax liability.;A. Taxable income $125,000, tax liability $32,470;B. Taxable income $100,000, tax liability $21,720;C. Taxable income $125,000, tax liability $25,367;D. Taxable income $125,000, tax liability $28,720;64. Tom Johnson, whose marginal tax rate on ordinary income;is 35%, sold four investment assets resulting;in the following capital gains and losses.;How much of Tom's net capital gain is taxed at 15%?;A. $42,800;B. $3,900;C. $2,700;D. $0;65. Mr. Quinn recognized a $900 net short-term capital gain;and a $1,380 long-term capital gain this year.;Which of the following statements is false?;A.;If Mr. Quinn's marginal tax rate on ordinary income is 15%;the tax liability on his capital gains is;$135.;B.;If Mr. Quinn's marginal tax rate on ordinary income is 33%;the tax liability on his capital gains is;$504.;C. Only $1,380 of the capital gain is subject to a;preferential tax rate.;D. None of the above is false.;66. Kate recognized a $25,700 net long-term capital gain and;a $33,000 net short-term capital loss this year.;What is her current net tax cost or savings from her capital;transactions if her marginal rate on ordinary;income is 28%?;A. $0;B. $840 net tax savings;C. $2,044 net tax savings;D. $3,015 net tax cost;67. Ms. Beal recognized a $42,400 net long-term capital gain;and a $33,000 net short-term capital loss this;year. What is her current net tax cost from her capital;transactions if her marginal rate on ordinary income;is 35%?;A. $6,360;B. $5,910;C. $1,410;D. $0;68. Mr. and Mrs. Philips recognized the following capital;gains and losses this year.;Their AGI before consideration of these gains and losses was;$140,000. Compute their AGI.;A. $140,000;B. $131,000;C. $137,000;D. $143,000;69. Which of the following statements about the individual;capital gains and losses is false?;A. Gain on sale of Section 1231 depreciable real property is;taxed at a 25% maximum rate.;B. Short-term capital gains are taxed as ordinary income.;C. Capital losses are deductible only against capital gains.;D. Nondeductible capital losses are carried forward for;deduction against future capital gains.;70. This year, Ms. Kwan recognized a $16,900 net long-term;capital loss. Which of the following statements;is true?;A. Ms. Kwan has a $16,900 long-term capital loss;carryforward into future years.;B. Ms. Kwan has a $16,900 nondeductible loss that she can;carry back three years and forward five years.;C. Ms. Kwan can deduct $3,000 of the loss as an itemized;deduction.;D. None of the above is true.;71. In 2001, Mrs. Qualley, contributed $100,000 in exchange;for 1,000 shares of Little Corporation, which;is a qualified small business. This year, Mrs. Qualley's;only capital transaction was the sale of the 1,000;shares of Little qualified small business stock for;$180,000. Compute Mrs. Qualley's tax on her capital;gain from this sale.;A. $6,000;B. $11,200;C. $22,400;D. None of the above.;72. Mr. Forest, a single taxpayer, recognized a $252,000;loss on the sale of Section 1244 stock. What is the;character of this loss?;A. $50,000 ordinary and $202,000 capital;B. $100,000 ordinary and $152,000 capital;C. $252,000 capital;D. $252,000 ordinary;73. In 1996, Mr. Exton, a single taxpayer, contributed;$30,000 in exchange for 100 shares of Morton stock.;In 2005, he paid $43,000 to another shareholder to purchase;100 more shares of Morton stock. Morton;stock qualified as Section 1244 stock when it was issued.;This year, Mr. Exton sold his 200 Morton;shares for $250 per share. What is the amount and character;of Mr. Exton's recognized loss?;A. $23,000 ordinary loss;B. $23,000 long-term capital loss;C. $3,000 long-term capital gain and $30,000 ordinary loss;D. $5,000 long-term capital loss and $18,000 ordinary loss;74. Which of the following statements about Section 1244;stock is true?;A. Some portion of a loss recognized on sale of Section 1244;stock is an ordinary deduction.;B. Gain recognized on sale of Section 1244 stock is taxed at;a 28% maximum rate.;C.;Individuals may purchase Section 1244 stock directly from;the issuing corporation or from another;shareholder.;D. Corporations may issue an unlimited amount of Section;1244 stock.;75. Ms. Kerry, who itemized deductions on Schedule A, paid;$15,000 interest on funds borrowed to acquire;taxable bonds. She also paid $660 of management fees that;were fully deductible on Schedule A. Her;AGI is $100,000, which includes $19,700 of interest income.;How much of the interest expense can she;deduct?;A. $0;B. $19,040;C. $19,700;D. $15,000;76. Ms. Lopez paid $7,260 interest on a mortgage on;undeveloped land that she holds as an investment. Ms.;Lopez's AGI is $112,200, which includes $4,900 interest;income from a certificate of deposit. Which of;the following statements is true?;A. Ms. Lopez can't deduct any of the $7,260 interest;expense.;B. Ms. Lopez can deduct $7,260 interest expense as an itemized;deduction.;C. Ms. Lopez can deduct $4,900 interest expense as an;itemized deduction.;D. Ms. Lopez can deduct $4,900 interest expense as an;above-the-line deduction.;77. Which of the following statements about investment;interest expense is true?;A. The interest is allowed as an above-the-line deduction.;B. The interest is allowed as a miscellaneous itemized;deduction.;C. Nondeductible interest carries forward into future years.;D. The interest is deductible to the extent of the;individual's gross investment income.;78. This year, Mr. and Mrs. Lebold paid $3,100 investment;interest expense. They earned $4,750 investment;income consisting of $1,900 interest and $2,850 qualified;dividends, and they incurred no investment;expenses. Which of the following statements is true?;A.;The Lebolds can deduct $3,100 interest expense if they elect;to treat $1,200 of the qualifying dividends;as ordinary income not taxed at a preferential rate.;B.;The Lebolds can deduct $3,100 interest expense if they elect;to treat the qualifying dividends as;ordinary income not taxed at a preferential rate.;C. The Lebolds can deduct $3,100 interest expense because;their investment income exceeds $3,100.;D. The Lebolds' deduction for their interest expense is;limited to $1,900.;79. Which of the following statements about an investment in;undeveloped land is false?;A.;An investor can elect to capitalize interest expense on a;mortgage incurred to purchase the;undeveloped land.;B. An investor can elect to capitalize property taxes on;undeveloped land.;C. An investment in undeveloped land is considered a liquid;asset.;D. Gain recognized on the sale of undeveloped land held as;an investment is capital gain.;80. Ms. Regga, a physician, earned $375,000 from her medical;practice and $20,500 interest and qualified;dividends from her investment portfolio. She was allocated a;$67,000 loss from a passive activity.;Compute Ms. Regga's AGI.;A. $328,500;B. $375,000;C. $395,500;D. None of the above;81. Mr. and Mrs. Sturm actively manage an office building that;they purchased in January 1997. This year;the office building generated a $68,000 net loss. The;couple's had the following sources of income;How much of the rental loss is deductible this year?;A. $0;B. $14,000;C. $25,000;D. $68,000;82. Lindsey owns and actively manages an apartment complex.;This year, the complex generated a $40,300;net loss. If Lindsey's AGI before considering this loss is;$118,200, and she owns no other passive;activities, how much of the loss is deductible this year?;A. $0;B. $9,100;C. $25,000;D. None of the above

 

Paper#44678 | Written in 18-Jul-2015

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