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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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