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1. Diego, who is single and lives alone, is physic...

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1. Diego, who is single and lives alone, is physically handicapped as a result of a diving accident. In order to live independently, he modifies his persona1 residence at a cost of $20,000. The modifications included widening halls and doorways for a wheelchair, installing support bars in the bathroom and kitchen, installing a stairway lift, and rewiring so he could reach electrical outlets and appliances. Diego pays $200 for an appraisal that places the value of the residence at $124,000 before the improvements and $129,000 after. As a result of the operation of the stairway lift, Diego experienced an increase of $475 in his utility bills for the current year. Disregarding percentage limitations, how much of the above expenditures qualify as medical expense deductions? a. $25,475. b. $20,475. c. $15,675. d. $15,475. e. None of the above. 2. Emily earns a salary of $150,000, and invests $60,000 for a 20% interest in a passive activity. Operations of the activity result in a loss of $400,000, of which Emily's share is $80,000. How is her loss characterized? a. $60,000 is suspended under the passive loss rules and $20,000 is suspended under the at-risk rules. b. $60,000 is suspended under the at-risk rules and $20,000 is suspended under the passive loss rules. c. $80,000 is suspended under the passive loss rules. d. $80,000 is suspended under the at-risk rules. e. None of the above. 3. Ramon incurred $83,100 of interest expense related to his investments in 2011. His investment illcome included $34,500 of interest and a $37,500 net capital gain on the sale of securities. What is the maximum amount of Ramon's investment interest expense deduction in 2011? a. $19,500. b. $34,500. c. $72,000. d. $83,100. e. None of the above. 4. During 2011, Barry (who is single and has no children) earned a salary of $13,000. He is age 30. His earned income credit for the year is: a. $0. b. $50. c. $414. d. $464. e. None of the above. 5. During the year, Purple Corporation (a U.S. Corporation) has U.S. source income of $1,800,000 and foreign income of $600,000. The foreign-source income generates foreign income taxes of $150,000. The U.S. income tax before the foreign tax credit is $816,000. PurpIe Corporation's foreign tax credit is: a. $112,500. b. $150,000. c. $204,000. d. $816,000. e. None of the above. 6. In 2010, Juan and Juanita incur $9,800 in legal and adoption fees directly related to the adoption of an infant son born in a nearby state. Over the next year, they incur another $4,500 of adoption expenses. The adoption becomes final in 2011. Which of the following choices properly reflects the amounts and years in which the adoption expenses credit is available: 2010 2011 a. $9,800 $ 4,500 b. None $13,360 c. None $14,300 d. $9,800 $ 4,370 e. None of the above. 7. George and Martha are married and file a joint tax return claiming their two children, ages 10 and 8 as dependents. Assuming their AGI is $123,450, George and Martha's child tax credit is: a. $0, b. $750. c. $1,300. d. $2,000. e. None of the above. 8. Bob and Sally are married, file a joint tax return, have AGI of $108,000, and have two children. Del is beginning her freshman year at State College during Fall 2011, and Owen is beginning his senior year at Southwest University during Fall 2011. Owen completed his junior year during the Spring semester of 2009 (i.e., he took a "leave of absence" during the 2010-2011 school year). Both Del and Owen are claimed as dependents on their parents' tax return. Del's qualifying tuition expenses and fees total $5,000 for the Fall semester, while Owen's qualifying tuition expenses were $6,100 for the Fall 2011 semester. Del's roam and baard costs were $3,200 for the Fall semester. Owen did not incur room and board costs since he lived with his aunt and uncle during the year. Full payment is made for the tuition and related expenses for both children at the beginning of each semester. in addition to the children's college expenses, Bob also spent $3,000 on professional education seminars during the year in order to maintain his license as a practicing dentist. Bob attended the seminars during July and August 2011. Compute the available education tax credits for Bob and Sally for 2011. a. $3,100. b. $5,000. c. $5,420. d. $5,600. e. None of the above. 9. Ashley sells real property for $280,000. The buyer pays $4,000 in property taxes that had accrued during the year while the property was still legally owned by Ashley. In addition, Ashley pays $14,000 in commissions and $3,000 in legal fees in connection with the sale. How much does Ashley realize (the amount realized) from the sale of her property? a. $259,000. b. $263,000. c. $267,000. d. $280,000. e. None of the above. 10. Jamie bought her house in 2006 for $395,000. Since then, she has deducted $70,000 in depreciation associated with her home office and has spent $45,000 replacing all the old pipes and plumbing. She sells the house on July 1, 2011, Her realtor charged $34,700 in commissions. Prior to listing the house with the realtor, she spent $300 advertising in the local newspaper. Sammy buys the house for $500,000 in cash, assumes her mortgage of $194,000, and pays property taxes of $4,200 for the entire year on December 1, 2011. What is Jamie's adjusted basis at the date of the sale and the amount realize? a. $370,000 adjusted basis; $661,400 amount realized. b. $370,000 adjusted basis; $661,100 amount realized. c. $370,000 adjusted basis; $665,200 amount realized. d. $325,000 adjusted basis; $663,200 amount realized. e. $325,000 adjusted basis; $694,000 amount realized. 11. Alicia buys a beach house for $425,000 which she uses as her personal vacation home. She builds an additional room on the house for $45,000. She sells the property for $510,000 and pays $30,000 in commissions and $4,000 in legal fees in connection with the sale. What is the recognized gain or loss on the sale of the house? a. $0. b. $6,000. c. $30,000. d. $40,000. e. None of the above. 12. Joyce's office building was destroyed in a fire (adjusted basis of $350,000; fair market value of $400,000). Of the insurance proceeds of $360,000 she receives, Joyce uses $310,000 to purchase additional inventory and invests the remaining $50,000 in short-term certificates of deposit. She received only $360,000 because of a co-insurance clause in her insurance policy. What is Joyce's recognized gain or loss? a. $0. b. $10,000 loss. c. $10,000 gain. d. $40,000 gain. e. None of the above. 13. Robert and Diane, husband and wife, live in Pennsylvania, a common law state. They purchased land as joint tenants in 2007 for $300,000. In 2011, Diane dies and bequeaths her share of the land to Robert. The land has a fair market value of $450,000. What is Robert's adjusted basis for the land? a. $300,000. b. $375,000. c. $450,000. d. $750,000. e. None of the above. 14. If personal use property is converted to business use: a. Gain is recognized on the date of conversion to the extent of the excess of the fair market value over the adjusted basis. b. Loss is recognized on the date of conversion to the extent of the excess of the adjusted basis over the fair market value. c. The basis for gain is the lower of the taxpayer's adjusted basis or the fair market value at the date of conversion. d. The basis for loss is the taxpayer's adjusted basis on the date of conversion. e. None of the above is correct. Just try to get as many of them done before 3pm. The rest I will attempt again after that time.,1. Diego, who is single and lives alone, is physically handicapped as a result of a diving accident. In order to live independently, he modifies his persona1 residence at a cost of $20,000. The modifications included widening halls and doorways for a wheelchair, installing support bars in the bathroom and kitchen, installing a stairway lift, and rewiring so he could reach electrical outlets and appliances. Diego pays $200 for an appraisal that places the value of the residence at $124,000 before the improvements and $129,000 after. As a result of the operation of the stairway lift, Diego experienced an increase of $475 in his utility bills for the current year. Disregarding percentage limitations, how much of the above expenditures qualify as medical expense deductions? a. $25,475. b. $20,475. c. $15,675. d. $15,475. e. None of the above. 2. Emily earns a salary of $150,000, and invests $60,000 for a 20% interest in a passive activity. Operations of the activity result in a loss of $400,000, of which Emily's share is $80,000. How is her loss characterized? a. $60,000 is suspended under the passive loss rules and $20,000 is suspended under the at-risk rules. b. $60,000 is suspended under the at-risk rules and $20,000 is suspended under the passive loss rules. c. $80,000 is suspended under the passive loss rules. d. $80,000 is suspended under the at-risk rules. e. None of the above. 3. Ramon incurred $83,100 of interest expense related to his investments in 2011. His investment illcome included $34,500 of interest and a $37,500 net capital gain on the sale of securities. What is the maximum amount of Ramon's investment interest expense deduction in 2011? a. $19,500. b. $34,500. c. $72,000. d. $83,100. e. None of the above.

 

Paper#7555 | Written in 18-Jul-2015

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