Question 1

For purposes of the accrual method of accounting, the economic performance test is met when

Accepted Answer

A)  the amount of the item can be reasonably estimated. 
B)  all events have occurred that fix the taxpayer's right to receive income. 
C)  the property or services are actually provided. 
D)  all events have occurred that establish the fact of a liability. 
A)  the amount of the item can be reasonably estimated. 
B)  all events have occurred that fix the taxpayer's right to receive income. 
C)  the property or services are actually provided. 
D)  all events have occurred that establish the fact of a liability.

Question 2

A shareholder's deduction for ordinary losses and separately stated items cannot exceed his basis for the S corporation stock plus the debt basis for the shareholder loans made to the corporation and corporate- level liabilities personally guaranteed by the shareholder.

Accepted Answer

A) True 
 B)False

Question 3

Liz, who is single in 2018, lives in a single family home and owns a second single family home that she rented for the entire year at a fair rental rate. Liz had the following items of income and expense during the current year. Income:   Expenses:   What is her adjusted gross income for the year?

Accepted Answer

A)  $62,200 
B)  $64,300 
C)  $68,000 
D)  $53,200 
A)  $62,200 
B)  $64,300 
C)  $68,000 
D)  $53,200

Question 4

Four years ago, Otto purchased farmland for $600,000 and spent an additional $40,000 on soil and water conservation which was deducted in the year of purchase. Otto has just sold the land for $900,000. How much of the $300,000 gain will be treated as ordinary income?

Accepted Answer

A)  $24,000 
B)  $300,000 
C)  $0 
D)  $40,000 
A)  $24,000 
B)  $300,000 
C)  $0 
D)  $40,000

Question 5

A taxpayer exchanges an office building held as an investment asset for an office building to be used in her business. The exchange will qualify as like- kind.

Accepted Answer

A) True 
 B)False

Question 6

If Jett Corporation receives a charter in 2016 but does not begin operations and file its first tax return until 2018, Jett may elect a fiscal year on the 2018 return.

Accepted Answer

A) True 
 B)False

Question 7

Which regulation deals with the gift tax?

Accepted Answer

A)  Reg. Sec. 20.2014- 5 
B)  Reg. Sec. 25.2518- 5 
C)  Reg. Sec. 301.7002- 5 
D)  Reg. Sec. 1.165- 5 
A)  Reg. Sec. 20.2014- 5 
B)  Reg. Sec. 25.2518- 5 
C)  Reg. Sec. 301.7002- 5 
D)  Reg. Sec. 1.165- 5

Question 8

Where non- like- kind property other than cash is received as boot, the amount of the boot is the property's fair market value.

Accepted Answer

A) True 
 B)False

Question 9

Describe the tax treatment for a noncorporate taxpayer in the 37% marginal tax bracket who sells each of the first two assets for $500,000 and each of the second two assets for $750,000. Each asset was purchased in 2014 and is used in a trade or business. There are no other gains and losses and no nonrecaptured Sec. 1231 losses.

Accepted Answer

• Land: $150,000 Sec. 1231 gain taxed at

Question 10

The Deferred Model offers two levels of tax deferral-the original contribution escapes current taxation as do the earnings on the underlying investment.

Accepted Answer

A) True 
 B)False

Question 11

Ben is a well- known professional football quarterback. His team's owners expect him to be a role model for young people. Any endorsement contracts that he receives are based on his reputation. In the current year, Ben is charged with assault. Ben hires an attorney to represent him in this matter. Ultimately, the charges are dismissed. What tax issues should Ben consider?

Accepted Answer

Is the fee paid to the attorne

Question 12

In February 2018, Dante acquired a new car costing $82,000. He used the car 80% in his sole proprietorship. Assuming Dante does not claim Sec. 179 or bonus depreciation, Dante's maximum depreciation deduction allowable for the car will be

Accepted Answer

A)  $8,000. 
B)  $14,400. 
C)  $10,000. 
D)  $13,120. 
A)  $8,000. 
B)  $14,400. 
C)  $10,000. 
D)  $13,120.

Question 13

Todd and Hillary, husband and wife, file separate returns. Todd and Hillary live in a community property state that considers separate property income to be community income. Todd's salary is $82,000 and Hillary's salary is $80,000. Hillary receives dividend income of $7,000 from stock inherited from her parents. Todd receives interest income of $5,000 from bonds purchased with his salary after marriage. Todd and Hillary receive $10,000 dividend income from stock they purchased jointly. Todd's income would be

Accepted Answer

A)  $94,500. 
B)  $92,000. 
C)  $93,000. 
D)  $97,000. 
A)  $94,500. 
B)  $92,000. 
C)  $93,000. 
D)  $97,000.

Question 14

Abra Corporation generated $100,000 of taxable income from operations this year and realized a $4,000 loss on the sale of Starbucks stock. Abra Corporation will pay taxes on $97,000 of taxable income.

Accepted Answer

A) True 
 B)False

Question 15

A small business uses the accrual method of accounting for its financial statements. It must also use the accrual method for computing taxable income.

Accepted Answer

A) True 
 B)False

Question 16

For the years 2014 through 2018 (inclusive) Max, a surgeon, has been involved in bowling competitions. Only in 2017 and 2018 did his revenue exceed the expenses from the activity. Which statement is correct?

Accepted Answer

A)  The activity is presumed to be a business. However, the IRS may prove it is a hobby. 
B)  The activity is presumed to be a hobby. However, Max may prove it is a business. 
C)  The activity is a hobby. Max cannot prove it is a business. 
D)  The activity is a business. The IRS cannot prove it is a hobby. 
A)  The activity is presumed to be a business. However, the IRS may prove it is a hobby. 
B)  The activity is presumed to be a hobby. However, Max may prove it is a business. 
C)  The activity is a hobby. Max cannot prove it is a business. 
D)  The activity is a business. The IRS cannot prove it is a hobby.

Question 17

The source of funds used to pay the taxes upon conversion of a traditional IRA to a Roth IRA can influence the decision. Use of funds from the IRA to pay the conversion tax is likely to bias the decision towards converting.

Accepted Answer

A) True 
 B)False

Question 18

An unmarried taxpayer may file as head of household if he maintains a home for his qualifying child.

Accepted Answer

A) True 
 B)False

Question 19

A taxpayer reports capital gains and losses on

Accepted Answer

A)  Schedule D of Form 1040 and Form 8949. 
B)  Form 8949. 
C)  Schedule D of Form 1040. 
D)  None of the above. 
A)  Schedule D of Form 1040 and Form 8949. 
B)  Form 8949. 
C)  Schedule D of Form 1040. 
D)  None of the above.

Question 20

Identify which of the following statements is false.

Accepted Answer

A)  The number "5" in the citation Reg. Sec. 1.166- 5 refers to the paragraph number. 
B)  The citation Rev. Rul. 2006- 5, I.R.B. 2006- 1, 33, indicates that the revenue ruling can be found on page 33 of the 1st I.R.B. for 2006. 
C)  The Cumulative Bulletin is issued semiannually while the Internal Revenue Bulletin is issued weekly. 
D)  All of the above are false. 
A)  The number "5" in the citation Reg. Sec. 1.166- 5 refers to the paragraph number. 
B)  The citation Rev. Rul. 2006- 5, I.R.B. 2006- 1, 33, indicates that the revenue ruling can be found on page 33 of the 1st I.R.B. for 2006. 
C)  The Cumulative Bulletin is issued semiannually while the Internal Revenue Bulletin is issued weekly. 
D)  All of the above are false.

For purposes of the accrual method of accounting, the economic performance test is met when

A shareholder's deduction for ordinary losses and separately stated items cannot exceed his basis for the S corporation stock plus the debt basis for the shareholder loans made to the corporation and corporate- level liabilities personally guaranteed by the shareholder.

Liz, who is single in 2018, lives in a single family home and owns a second single family home that she rented for the entire year at a fair rental rate. Liz had the following items of income and expense during the current year. Income: Expenses: What is her adjusted gross income for the year?

Four years ago, Otto purchased farmland for $600,000 and spent an additional $40,000 on soil and water conservation which was deducted in the year of purchase. Otto has just sold the land for $900,000. How much of the $300,000 gain will be treated as ordinary income?

A taxpayer exchanges an office building held as an investment asset for an office building to be used in her business. The exchange will qualify as like- kind.

If Jett Corporation receives a charter in 2016 but does not begin operations and file its first tax return until 2018, Jett may elect a fiscal year on the 2018 return.

Which regulation deals with the gift tax?

Where non- like- kind property other than cash is received as boot, the amount of the boot is the property's fair market value.

The Deferred Model offers two levels of tax deferral-the original contribution escapes current taxation as do the earnings on the underlying investment.

In February 2018, Dante acquired a new car costing $82,000. He used the car 80% in his sole proprietorship. Assuming Dante does not claim Sec. 179 or bonus depreciation, Dante's maximum depreciation deduction allowable for the car will be

Abra Corporation generated $100,000 of taxable income from operations this year and realized a $4,000 loss on the sale of Starbucks stock. Abra Corporation will pay taxes on $97,000 of taxable income.

A small business uses the accrual method of accounting for its financial statements. It must also use the accrual method for computing taxable income.

For the years 2014 through 2018 (inclusive) Max, a surgeon, has been involved in bowling competitions. Only in 2017 and 2018 did his revenue exceed the expenses from the activity. Which statement is correct?

The source of funds used to pay the taxes upon conversion of a traditional IRA to a Roth IRA can influence the decision. Use of funds from the IRA to pay the conversion tax is likely to bias the decision towards converting.

An unmarried taxpayer may file as head of household if he maintains a home for his qualifying child.

A taxpayer reports capital gains and losses on

Identify which of the following statements is false.

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

For purposes of the accrual method of accounting, the economic performance test is met when

A shareholder's deduction for ordinary losses and separately stated items cannot exceed his basis for the S corporation stock plus the debt basis for the shareholder loans made to the corporation and corporate- level liabilities personally guaranteed by the shareholder.

Liz, who is single in 2018, lives in a single family home and owns a second single family home that she rented for the entire year at a fair rental rate. Liz had the following items of income and expense during the current year. Income: Expenses: What is her adjusted gross income for the year?

Four years ago, Otto purchased farmland for $600,000 and spent an additional $40,000 on soil and water conservation which was deducted in the year of purchase. Otto has just sold the land for $900,000. How much of the $300,000 gain will be treated as ordinary income?

A taxpayer exchanges an office building held as an investment asset for an office building to be used in her business. The exchange will qualify as like- kind.

If Jett Corporation receives a charter in 2016 but does not begin operations and file its first tax return until 2018, Jett may elect a fiscal year on the 2018 return.

Which regulation deals with the gift tax?

Where non- like- kind property other than cash is received as boot, the amount of the boot is the property's fair market value.

The Deferred Model offers two levels of tax deferral-the original contribution escapes current taxation as do the earnings on the underlying investment.

In February 2018, Dante acquired a new car costing $82,000. He used the car 80% in his sole proprietorship. Assuming Dante does not claim Sec. 179 or bonus depreciation, Dante's maximum depreciation deduction allowable for the car will be

Abra Corporation generated $100,000 of taxable income from operations this year and realized a $4,000 loss on the sale of Starbucks stock. Abra Corporation will pay taxes on $97,000 of taxable income.

A small business uses the accrual method of accounting for its financial statements. It must also use the accrual method for computing taxable income.

For the years 2014 through 2018 (inclusive) Max, a surgeon, has been involved in bowling competitions. Only in 2017 and 2018 did his revenue exceed the expenses from the activity. Which statement is correct?

The source of funds used to pay the taxes upon conversion of a traditional IRA to a Roth IRA can influence the decision. Use of funds from the IRA to pay the conversion tax is likely to bias the decision towards converting.

An unmarried taxpayer may file as head of household if he maintains a home for his qualifying child.

A taxpayer reports capital gains and losses on

Identify which of the following statements is false.

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