Question 1

Corporations issuing incentive stock options receive a tax deduction for compensation expense.

Accepted Answer

A) True 
 B)False

Question 2

Gains and losses resulting from condemnations of Sec. 1231 property and capital assets held more than one year are classified as ordinary gains and losses.

Accepted Answer

A) True 
 B)False

Question 3

Interest is not imputed on a gift loan between two individuals totaling $100,000 except when the borrowed funds are used to purchase income- producing property.

Accepted Answer

A) True 
 B)False

Question 4

Phoebe's AGI for the current year is $140,000. Included in this AGI is $100,000 salary, $20,000 of interest income earned on bank accounts, $12,000 of dividend income, a short- term capital gain of $2,000 and a long- term capital gain of $6,000. In earning the investment income, Phoebe paid investment interest expense of $30,000.
What is Phoebe's investment interest expense deduction for the year, assuming no special elections are made?

Accepted Answer

Investment income in

Question 5

Explain how committee reports can be used in tax research. What do they indicate?

Accepted Answer

Committee reports can help res

Question 6

Before consideration of stock sales, Rex has generated $150,000 of AGI this year due to salary, interest income and dividends. Rex is a single taxpayer. He plans to sell his shares of Trisco Inc., a qualifying small business corporation under Sec. 1244, realizing a $110,000 loss. Due to the sale of the stock, he will reduce his AGI by

Accepted Answer

A)  $50,000. 
B)  $53,000. 
C)  $3,000. 
D)  $110,000. 
A)  $50,000. 
B)  $53,000. 
C)  $3,000. 
D)  $110,000.

Question 7

Ike and Tina married and moved into their new home (purchase price $800,000) 18 months ago. They are thinking of selling the home which is now worth $1,300,000. They plan to reinvest in a smaller home costing approximately $600,000. What should they consider before selling their home?

Accepted Answer

Under Sec. 121, if Ike and Tina own and

Question 8

Identify which of the following statements is false.

Accepted Answer

A)  The citation Estate of Newhouse, 94 T.C. 193 (1990), nonacq. 1991- 1 C.B. 1 indicates that the IRS did not formally disagree with this 1990 Tax Court decision until 1991. 
B)  Regular and memorandum decisions of the Tax Court are published by the government in the Tax Court of the United States Reports. 
C)  The Board of Tax Appeals preceded the Tax Court. 
D)  The citation Cristofani, 97 T.C. 74 (1991) indicates that the decision is a regular decision of the Tax Court. 
A)  The citation Estate of Newhouse, 94 T.C. 193 (1990), nonacq. 1991- 1 C.B. 1 indicates that the IRS did not formally disagree with this 1990 Tax Court decision until 1991. 
B)  Regular and memorandum decisions of the Tax Court are published by the government in the Tax Court of the United States Reports. 
C)  The Board of Tax Appeals preceded the Tax Court. 
D)  The citation Cristofani, 97 T.C. 74 (1991) indicates that the decision is a regular decision of the Tax Court.

Question 9

Depreciable property placed in service nine months earlier is considered Sec. 1231 property.

Accepted Answer

A) True 
 B)False

Question 10

A corporation is classified as a personal holding company. Its taxable income is $300,000 and its regular federal income tax liability is $63,000. The company claims a $40,000 dividends- received deduction and pays $30,000 dividends to its shareholders. The personal holding company tax is

Accepted Answer

A)  $61,400. 
B)  $49,400. 
C)  $41,400. 
D)  $62,000. 
A)  $61,400. 
B)  $49,400. 
C)  $41,400. 
D)  $62,000.

Question 11

A calendar- year corporation has a $75,000 current E&P amount, and a $25,000 positive accumulated E&P balance at the beginning of the year. Shareholders of the corporation have a total basis in outstanding shares of $40,000. The corporation pays a $120,000 distribution to the shareholders. The tax results to the shareholders will be

Accepted Answer

A)  dividend income of $60,000 and capital gain of $60,000. 
B)  dividend income of $100,000 and capital gain of $20,000. 
C)  dividend income of $100,000 and a tax- free return of capital of $20,000. 
D)  dividend income of $100,000 and no other consequences. 
A)  dividend income of $60,000 and capital gain of $60,000. 
B)  dividend income of $100,000 and capital gain of $20,000. 
C)  dividend income of $100,000 and a tax- free return of capital of $20,000. 
D)  dividend income of $100,000 and no other consequences.

Question 12

Individuals Opal and Ben form OB Corporation. Opal transfers land and a building with a $550,000 adjusted basis and a $625,000 FMV in exchange for 50% of the stock of the OB Corporation worth $610,000 and a $15,000 note. Ben transfers cash of $625,000 for 50% of the stock worth $610,000 and a note of the OB Corporation valued at $15,000. Opal's basis in the stock received is

Accepted Answer

A)  $560,000. 
B)  $625,000. 
C)  $550,000. 
D)  $610,000. 
A)  $560,000. 
B)  $625,000. 
C)  $550,000. 
D)  $610,000.

Question 13

Maya expects to report about $2 million of AGI and $1.7 million of taxable income. Her AGI is composed of $1.25 million of salary, and the balance is investment income. Maya is thinking about selling some stock before year- end. She purchased the stock three years ago and expects to recognize a $500,000 gain. How much federal tax will she pay in total on the stock gain?

Accepted Answer

A)  $75,000 
B)  $119,000 
C)  $100,000 
D)  $185,000 
A)  $75,000 
B)  $119,000 
C)  $100,000 
D)  $185,000

Question 14

Charlie Company is a partnership with two owners, Charlie and Robert. Each owner has a $20,000 original basis in the entity having contributed cash to the partnership at its formation. In the first year of operations, the partnership reported $50,000 of income which is allocated to each partner equally. The partnership has no liabilities. If Charlie sells his partnership interest to Jody for $55,000, what is the amount of gain or loss on the transaction?

Accepted Answer

The answer of Charlie Company is a partnership with two...

Question 15

Describe the types of audits that the IRS conducts.

Accepted Answer

In an office audit, the taxpayer goes to

Question 16

Hazel Corporation reported the following results for the current year:   What is the amount of the taxable income for the current year and what is the amount of the charitable contributi carryforward to next year?

Accepted Answer

The charitable contributions d

Question 17

In weighing whether to convert a traditional IRA to a Roth IRA, the expectation of lower tax rates at retirement is likely to bias the decision towards retaining the traditional IRA.

Accepted Answer

A) True 
 B)False

Question 18

Buzz is a successful college basketball coach. In April 2017, he signed a contract to coach at Mountain State University. In April 2018, Buzz accepted a position as head basketball coach at Beach University. The terms of his contract with Mountain State require that Buzz repay the university $150,000 he received in 2017. Discuss the tax issues encountered by Buzz and your recommendation for their treatment.

Accepted Answer

According to the claim of right doctrine

Question 19

Tory considered opening a cupcake store in Denver. Tory is currently a full- time dentist. After spending $8,600 on a market study, he decided against opening the store on August 1. What is the maximum amount of deduction for the current year attributable to this expenditure?

Accepted Answer

A)  $6,800 
B)  $5,600 
C)  $5,000 
D)  $0 
A)  $6,800 
B)  $5,600 
C)  $5,000 
D)  $0

Question 20

Javier incurred a $40,000 net operating loss in 2018. In 2019, he earned $35,000 of taxable income. Javier will be able to take an NOL deduction in 2019 of

Accepted Answer

A)  $35,000. 
B)  $40,000. 
C)  $26,250. 
D)  $28,000. 
A)  $35,000. 
B)  $40,000. 
C)  $26,250. 
D)  $28,000.

Corporations issuing incentive stock options receive a tax deduction for compensation expense.

Gains and losses resulting from condemnations of Sec. 1231 property and capital assets held more than one year are classified as ordinary gains and losses.

Interest is not imputed on a gift loan between two individuals totaling $100,000 except when the borrowed funds are used to purchase income- producing property.

Explain how committee reports can be used in tax research. What do they indicate?

Ike and Tina married and moved into their new home (purchase price $800,000) 18 months ago. They are thinking of selling the home which is now worth $1,300,000. They plan to reinvest in a smaller home costing approximately $600,000. What should they consider before selling their home?

Identify which of the following statements is false.

Depreciable property placed in service nine months earlier is considered Sec. 1231 property.

A corporation is classified as a personal holding company. Its taxable income is $300,000 and its regular federal income tax liability is $63,000. The company claims a $40,000 dividends- received deduction and pays $30,000 dividends to its shareholders. The personal holding company tax is

Describe the types of audits that the IRS conducts.

Hazel Corporation reported the following results for the current year: What is the amount of the taxable income for the current year and what is the amount of the charitable contributi carryforward to next year?

In weighing whether to convert a traditional IRA to a Roth IRA, the expectation of lower tax rates at retirement is likely to bias the decision towards retaining the traditional IRA.

Tory considered opening a cupcake store in Denver. Tory is currently a full- time dentist. After spending $8,600 on a market study, he decided against opening the store on August 1. What is the maximum amount of deduction for the current year attributable to this expenditure?

Javier incurred a $40,000 net operating loss in 2018. In 2019, he earned $35,000 of taxable income. Javier will be able to take an NOL deduction in 2019 of

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

S Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

Filters

Exam 16: Tax Deductions and Travel Expenses for Employees and Self-Employed Individuals

Corporations issuing incentive stock options receive a tax deduction for compensation expense.

Gains and losses resulting from condemnations of Sec. 1231 property and capital assets held more than one year are classified as ordinary gains and losses.

Interest is not imputed on a gift loan between two individuals totaling $100,000 except when the borrowed funds are used to purchase income- producing property.

Explain how committee reports can be used in tax research. What do they indicate?

Ike and Tina married and moved into their new home (purchase price $800,000) 18 months ago. They are thinking of selling the home which is now worth $1,300,000. They plan to reinvest in a smaller home costing approximately $600,000. What should they consider before selling their home?

Identify which of the following statements is false.

Depreciable property placed in service nine months earlier is considered Sec. 1231 property.

A corporation is classified as a personal holding company. Its taxable income is $300,000 and its regular federal income tax liability is $63,000. The company claims a $40,000 dividends- received deduction and pays $30,000 dividends to its shareholders. The personal holding company tax is

Describe the types of audits that the IRS conducts.

Hazel Corporation reported the following results for the current year: What is the amount of the taxable income for the current year and what is the amount of the charitable contributi carryforward to next year?

In weighing whether to convert a traditional IRA to a Roth IRA, the expectation of lower tax rates at retirement is likely to bias the decision towards retaining the traditional IRA.

Tory considered opening a cupcake store in Denver. Tory is currently a full- time dentist. After spending $8,600 on a market study, he decided against opening the store on August 1. What is the maximum amount of deduction for the current year attributable to this expenditure?

Javier incurred a $40,000 net operating loss in 2018. In 2019, he earned $35,000 of taxable income. Javier will be able to take an NOL deduction in 2019 of

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

S Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

Filters