Question 1

The federal income tax is the dominant form of taxation by the federal government.

Accepted Answer

A) True 
 B)False

Question 2

Losses on the sale of property between a taxpayer and his/her more than 50- percent- owned corporation are disallowed.

Accepted Answer

A) True 
 B)False

Question 3

When returns are processed, they are scored to determine their potential for yielding additional tax revenues. This program is called

Accepted Answer

A)  Standard Audit Program. 
B)  Taxpayer Compliance Measurement Program. 
C)  Field Audit Program. 
D)  Discriminant Function System. 
A)  Standard Audit Program. 
B)  Taxpayer Compliance Measurement Program. 
C)  Field Audit Program. 
D)  Discriminant Function System.

Question 4

Capital improvements to real property must be depreciated over the remaining life of the property on which the improvements were made.

Accepted Answer

A) True 
 B)False

Question 5

Sarah contributes $25,000 to a church. Sarah's marginal tax rate is 35% while her average tax rate is 25%. After considering her tax savings, Sarah's contribution costs

Accepted Answer

A)  $18,750. 
B)  $16,250. 
C)  $6,250. 
D)  $8,750. 
A)  $18,750. 
B)  $16,250. 
C)  $6,250. 
D)  $8,750.

Question 6

In 2012, Regina purchased a home in Las Vegas which cost $280,000. Due to increase in the market value of the home, she refinanced her mortgage and her debt on the home totaled $300,000 at the end of 2014. Regina accepted a new job in Dallas in April 2015. Unable to sell her home, she rented it in November 2015, at which time its fair market value was $240,000. In June 2018, she sold the home for $230,000. What tax issues should Regina consider?

Accepted Answer

Is the home a capital asset since she ha

Question 7

Billy and Sue are married and live in Texas, a community property state. They jointly own real property with an adjusted basis of $200,000. When the property has a FMV of $450,000, Billy dies leaving all of the property to Sue. If she later sells the property for $650,000, what is Sue's gain on the sale?

Accepted Answer

A)  $225,000 
B)  $325,000 
C)  $200,000 
D)  $450,000 
A)  $225,000 
B)  $325,000 
C)  $200,000 
D)  $450,000

Question 8

Bryan Corporation, an S corporation since its organization, is owned entirely by Mr. Bryan. The corporation uses calendar year as its taxable year. Mr. Bryan paid $120,000 for his Bryan stock when the corporation was formed o January 1 of this year. For this year, Bryan Corporation reported the following results:   Distributions of $40,000 were made during the year. What is the basis of Mr. Bryan's stock on December 31?

Accepted Answer

A)  $203,000 
B)  $205,000 
C)  $165,000 
D)  $163,000 
A)  $203,000 
B)  $205,000 
C)  $165,000 
D)  $163,000

Question 9

In an S corporation, shareholders

Accepted Answer

A)  are taxed only on dividends. 
B)  are only taxed on salaries. 
C)  are taxed on their proportionate share of earnings. 
D)  may allocate income among themselves in order to consider special contributions. 
A)  are taxed only on dividends. 
B)  are only taxed on salaries. 
C)  are taxed on their proportionate share of earnings. 
D)  may allocate income among themselves in order to consider special contributions.

Question 10

Larry and Ally are married and file a joint return. They are considering purchasing a personal residence that will generate two deductions: $10,000 in home mortgage interest and $8,000 in real estate taxes. Their marginal tax rate is 24%. If Larry and Ally purchase the residence, what will be the after- tax cost of the additional $18,000 in expenditures?

Accepted Answer

Tax savings of expenditures: (

Question 11

Clarise bought a building three years ago for $180,000 to use in her business. The straight- line method of depreciation was used and $15,000 of depreciation deductions were allowed. During the current year, Clarise sells the building to her wholly owned corporation for $235,000. The tax results to Clarise are

Accepted Answer

A)  $70,000 ordinary income. 
B)  $55,000 ordinary income and $15,000 Sec. 1231 gain. 
C)  $15,000 of ordinary income and $55,000 Sec. 1231 gain. 
D)  $70,000 of Sec. 1231 gain. 
A)  $70,000 ordinary income. 
B)  $55,000 ordinary income and $15,000 Sec. 1231 gain. 
C)  $15,000 of ordinary income and $55,000 Sec. 1231 gain. 
D)  $70,000 of Sec. 1231 gain.

Question 12

A taxpayer obtains permission to change an accounting method. The change will result in a positive adjustment to income. To help in managing its cash flow, the taxpayer would like to spread the change over multiple years. In order to take advantage of this opportunity, the net positive adjustment must exceed

Accepted Answer

A)  $25,000. 
B)  $10,000. 
C)  $0. 
D)  $3,000. 
A)  $25,000. 
B)  $10,000. 
C)  $0. 
D)  $3,000.

Question 13

Doggie Rx Inc. is a new company developing a tasty chewable pill for dogs that will protect them from all types of fleas, ticks and intestinal parasites. This is its first year of business, and it has spent $500,000 on qualifying research expenditures. Doggie Rx will earned a simplified research credit of

Accepted Answer

A)  $15,000. 
B)  $70,000. 
C)  $250,000. 
D)  $30,000. 
A)  $15,000. 
B)  $70,000. 
C)  $250,000. 
D)  $30,000.

Question 14

Tom and Anita are married, file a joint return with an AGI of $165,000, and have one dependent child, Tim, who is a first- time freshman in college. The following expenses are incurred and paid in 2087:   What is the maximum education credit allowed to Tom and Anita?

Accepted Answer

Tim is eligible for the American Opportu

Question 15

Discuss why the distinction between deductions for AGI and from AGI is important to individuals.

Accepted Answer

An individual is permitted to deduct the

Question 16

Expenses incurred in a trade or business generally are deductions for AGI.

Accepted Answer

A) True 
 B)False

Question 17

Sachi is single and has taxable income of $33,000 without considering the sale of a capital asset in November of 2018 for $20,000. That asset was purchased six years earlier and has a tax basis of $5,000. The tax liability applicable to only the capital gain is

Accepted Answer

A)  $3,000. 
B)  $0. 
C)  $1,410. 
D)  $2,250. 
A)  $3,000. 
B)  $0. 
C)  $1,410. 
D)  $2,250.

Question 18

Which of the following items will result in an inclusion in gross income?

Accepted Answer

A)  Jane receives a check from her stock broker for $50,000 due to the sale of stock purchased five years ago for $60,000. 
B)  Due to the discovery of oil beneath Finn's land, the value of Finn's land increases $1,000,000. 
C)  A 10% stock dividend for all shareholders is declared by the board of directors of a publicly- traded corporation. Mel receives 10 shares of stock worth $1,000. 
D)  George won $50 at his church's bingo game night. 
A)  Jane receives a check from her stock broker for $50,000 due to the sale of stock purchased five years ago for $60,000. 
B)  Due to the discovery of oil beneath Finn's land, the value of Finn's land increases $1,000,000. 
C)  A 10% stock dividend for all shareholders is declared by the board of directors of a publicly- traded corporation. Mel receives 10 shares of stock worth $1,000. 
D)  George won $50 at his church's bingo game night.

Question 19

Which statement is correct regarding SIMPLE retirement plans?

Accepted Answer

A)  SIMPLE plans are not subject to nondiscrimination rules. 
B)  This plan can only be adopted by employers with 50 or fewer employees. 
C)  Employer contributions must vest within three years. 
D)  Only the employer can contribute to the plan. 
A)  SIMPLE plans are not subject to nondiscrimination rules. 
B)  This plan can only be adopted by employers with 50 or fewer employees. 
C)  Employer contributions must vest within three years. 
D)  Only the employer can contribute to the plan.

Question 20

In 2018, an estate is not taxable unless the sum of the taxable estate and taxable gifts made after 1976 exceeds

Accepted Answer

A)  $10,000,000. 
B)  $11,180,000. 
C)  $4,425,800. 
D)  $5,000,000. 
A)  $10,000,000. 
B)  $11,180,000. 
C)  $4,425,800. 
D)  $5,000,000.

The federal income tax is the dominant form of taxation by the federal government.

Losses on the sale of property between a taxpayer and his/her more than 50- percent- owned corporation are disallowed.

When returns are processed, they are scored to determine their potential for yielding additional tax revenues. This program is called

Capital improvements to real property must be depreciated over the remaining life of the property on which the improvements were made.

Sarah contributes $25,000 to a church. Sarah's marginal tax rate is 35% while her average tax rate is 25%. After considering her tax savings, Sarah's contribution costs

In an S corporation, shareholders

Tom and Anita are married, file a joint return with an AGI of $165,000, and have one dependent child, Tim, who is a first- time freshman in college. The following expenses are incurred and paid in 2087: What is the maximum education credit allowed to Tom and Anita?

Discuss why the distinction between deductions for AGI and from AGI is important to individuals.

Expenses incurred in a trade or business generally are deductions for AGI.

Sachi is single and has taxable income of $33,000 without considering the sale of a capital asset in November of 2018 for $20,000. That asset was purchased six years earlier and has a tax basis of $5,000. The tax liability applicable to only the capital gain is

Which of the following items will result in an inclusion in gross income?

Which statement is correct regarding SIMPLE retirement plans?

In 2018, an estate is not taxable unless the sum of the taxable estate and taxable gifts made after 1976 exceeds

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

The federal income tax is the dominant form of taxation by the federal government.

Losses on the sale of property between a taxpayer and his/her more than 50- percent- owned corporation are disallowed.

When returns are processed, they are scored to determine their potential for yielding additional tax revenues. This program is called

Capital improvements to real property must be depreciated over the remaining life of the property on which the improvements were made.

Sarah contributes $25,000 to a church. Sarah's marginal tax rate is 35% while her average tax rate is 25%. After considering her tax savings, Sarah's contribution costs

In an S corporation, shareholders

Tom and Anita are married, file a joint return with an AGI of $165,000, and have one dependent child, Tim, who is a first- time freshman in college. The following expenses are incurred and paid in 2087: What is the maximum education credit allowed to Tom and Anita?

Discuss why the distinction between deductions for AGI and from AGI is important to individuals.

Expenses incurred in a trade or business generally are deductions for AGI.

Sachi is single and has taxable income of $33,000 without considering the sale of a capital asset in November of 2018 for $20,000. That asset was purchased six years earlier and has a tax basis of $5,000. The tax liability applicable to only the capital gain is

Which of the following items will result in an inclusion in gross income?

Which statement is correct regarding SIMPLE retirement plans?

In 2018, an estate is not taxable unless the sum of the taxable estate and taxable gifts made after 1976 exceeds

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