Question 1

Which of the following statements regarding the qualified tuition plans (QTP) is incorrect?

Accepted Answer

A)  Distributions made from a QTP for college tuition will be tax- free in addition to qualifying for the American Opportunity credit or lifetime learning credit. 
B)  Distributions can be made tax- free to pay for room and board at college. 
C)  Distributions of income not used for qualified higher education expenses are taxable and subject to a 10% penalty. 
D)  Katie's parents had established a QTP for Katie, but she has received a "full- ride" scholarship. Katie's parents can name her sister as a replacement beneficiary of the QTP. 
A)  Distributions made from a QTP for college tuition will be tax- free in addition to qualifying for the American Opportunity credit or lifetime learning credit. 
B)  Distributions can be made tax- free to pay for room and board at college. 
C)  Distributions of income not used for qualified higher education expenses are taxable and subject to a 10% penalty. 
D)  Katie's parents had established a QTP for Katie, but she has received a "full- ride" scholarship. Katie's parents can name her sister as a replacement beneficiary of the QTP.

Question 2

Eric purchased a building in 2007 that he uses in his business. Eric uses the straight- line method for the building. Eric's original cost for the building is $420,000 and cost- recovery deductions are $120,000. Eric is in the top tax bracket and has never sold any other business assets. If the building is sold for $560,000, the tax results are

Accepted Answer

A)  $120,000 Sec. 1245 ordinary income, $140,000 Sec. 1231 gain taxable at 20%. 
B)  $260,000 unrecaptured Sec. 1250 gain, all taxable at 25%. 
C)  $260,000 Sec. 1231 gain, of which $120,000 is unrecaptured Sec. 1250 gain taxable at 25% and the $140,000 balance is taxable at 20%. 
D)  $260,000 Sec. 1231 gain, all taxable at 20%. 
A)  $120,000 Sec. 1245 ordinary income, $140,000 Sec. 1231 gain taxable at 20%. 
B)  $260,000 unrecaptured Sec. 1250 gain, all taxable at 25%. 
C)  $260,000 Sec. 1231 gain, of which $120,000 is unrecaptured Sec. 1250 gain taxable at 25% and the $140,000 balance is taxable at 20%. 
D)  $260,000 Sec. 1231 gain, all taxable at 20%.

Question 3

Healthwise Ambulance requires its employees to be on 24- hour call and consequently gives them $800 per month housing allowance and a $200 per month food allowance. Ron, an employee of Healthwise, receives a salary of $40,000 per year (this does not include the allowances). Ron will be taxed each year on

Accepted Answer

A)  $42,400. 
B)  $49,600. 
C)  $52,000. 
D)  $40,000. 
A)  $42,400. 
B)  $49,600. 
C)  $52,000. 
D)  $40,000.

Question 4

If a corporation distributes appreciated property to its shareholders, the corporation will recognize any realized gain.

Accepted Answer

A) True 
 B)False

Question 5

Accelerated death benefits from a life insurance policy received by a terminally ill person may be excluded from taxable income.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following statements is not true with regard to like- kind exchanges?

Accepted Answer

A)  Nonrecognition of gains and losses is mandatory if the exchange is a like- kind exchange. 
B)  The holding period of like- kind property received includes the holding period of the property exchanged. 
C)  The basis of property received in an exchange is equal to the basis of the property exchanged less the boot received plus the gain recognized and less any loss recognized. 
D)  A loss is always recognized if the taxpayer transfers non- like- kind personal- use property (e.g., a personal- use car) in an otherwise like- kind exchange. 
A)  Nonrecognition of gains and losses is mandatory if the exchange is a like- kind exchange. 
B)  The holding period of like- kind property received includes the holding period of the property exchanged. 
C)  The basis of property received in an exchange is equal to the basis of the property exchanged less the boot received plus the gain recognized and less any loss recognized. 
D)  A loss is always recognized if the taxpayer transfers non- like- kind personal- use property (e.g., a personal- use car) in an otherwise like- kind exchange.

Question 7

Partnerships, S corporations, and personal service corporations may elect a taxable year which results in a tax deferral of four months or less.

Accepted Answer

A) True 
 B)False

Question 8

Reva and Josh Lewis had alternative minimum taxable income of $1,050,000 in 2018 and file a joint return. For purposes of computing the alternative minimum tax, their exemption is

Accepted Answer

A)  $0. 
B)  $96,900. 
C)  $59,400. 
D)  $109,400. 
A)  $0. 
B)  $96,900. 
C)  $59,400. 
D)  $109,400.

Question 9

A purchaser of the assets of a business must allocate the purchase price to the individual assets in accordance with the written agreement between the purchaser and the seller. Which of the following assets would be least preferred for purposes of allocating value from the purchaser point of view?

Accepted Answer

A)  office building 
B)  inventory 
C)  goodwill 
D)  equipment 
A)  office building 
B)  inventory 
C)  goodwill 
D)  equipment

Question 10

All of the following are executive (administrative) sources of tax law except

Accepted Answer

A)  Internal Revenue Code. 
B)  Revenue Procedures. 
C)  Income Tax Regulations. 
D)  Revenue Rulings. 
A)  Internal Revenue Code. 
B)  Revenue Procedures. 
C)  Income Tax Regulations. 
D)  Revenue Rulings.

Question 11

Describe the components of tax practice.

Accepted Answer

a. Tax compliance and procedur

Question 12

Capital recoveries increase the adjusted basis of an asset.

Accepted Answer

A) True 
 B)False

Question 13

CPA Associates, a cash- basis partnership with a calendar tax year, signs a contract for a 20- month subscription to an online tax research service, effective as of April 1. The firm pays the full $10,000 subscription bill on the April 1, 2018 subscription start date. For 2018 the firm can deduct

Accepted Answer

A)  $5,500. 
B)  $5,000. 
C)  $10,000. 
D)  $4,500. 
A)  $5,500. 
B)  $5,000. 
C)  $10,000. 
D)  $4,500.

Question 14

The primary objective of the federal income tax law is to achieve various economic and social policy objectives.

Accepted Answer

A) True 
 B)False

Question 15

Lester, a widower qualifying as a surviving spouse, has $209,000 of salary, five personal and dependency exemptions and itemizes deductions. Lester must use which form to report his taxable income?

Accepted Answer

A)  Form 1040A 
B)  Form 1040 
C)  Form 1040ES 
D)  Form 1040EZ 
A)  Form 1040A 
B)  Form 1040 
C)  Form 1040ES 
D)  Form 1040EZ

Question 16

A daughter or son may not satisfy the criteria to be considered a qualifying child but may still qualify as a dependent.

Accepted Answer

A) True 
 B)False

Question 17

Juan's business delivery truck is destroyed in an accident. He paid $40,000 for the truck, and $30,000 of depreciation has been deducted during its period of use. The insurance company pays Juan $32,000 due to the accident. What is the minimum amount that Juan must spend on a new truck to avoid any gain recognition?

Accepted Answer

A)  $40,000 
B)  $10,000 
C)  $32,000 
D)  $22,000 
A)  $40,000 
B)  $10,000 
C)  $32,000 
D)  $22,000

Question 18

Hope receives an $18,500 scholarship from State University. The university specifies that $8,500 is for tuition, books, supplies, and equipment, while $10,000 is for room and board. In addition, Hope works part- time at the campus library and earns $5,000. Hope's gross income is

Accepted Answer

A)  $18,500. 
B)  $23,500. 
C)  $15,000. 
D)  $5,000. 
A)  $18,500. 
B)  $23,500. 
C)  $15,000. 
D)  $5,000.

Question 19

Kevin exchanges an office building used in his business for another office building worth $200,000 plus $30,000 c FMV of Kevin's old building is $280,000 (basis $150,000) and it is subject to a mortgage of $50,000. The mortgage assumed by the other party.
a. What is the amount of gain realized by Kevin?
b. What is the amount of gain recognized by Kevin?
c. What is the basis of the new building to Kevin?

Accepted Answer

a. Property received: @#IMG-DLM& 
b. This is a qua

Question 20

Charitable contributions made to individuals are deductible if the individuals can show extreme financial need.

Accepted Answer

A) True 
 B)False

Which of the following statements regarding the qualified tuition plans (QTP) is incorrect?

If a corporation distributes appreciated property to its shareholders, the corporation will recognize any realized gain.

Accelerated death benefits from a life insurance policy received by a terminally ill person may be excluded from taxable income.

Which of the following statements is not true with regard to like- kind exchanges?

Partnerships, S corporations, and personal service corporations may elect a taxable year which results in a tax deferral of four months or less.

Reva and Josh Lewis had alternative minimum taxable income of $1,050,000 in 2018 and file a joint return. For purposes of computing the alternative minimum tax, their exemption is

A purchaser of the assets of a business must allocate the purchase price to the individual assets in accordance with the written agreement between the purchaser and the seller. Which of the following assets would be least preferred for purposes of allocating value from the purchaser point of view?

All of the following are executive (administrative) sources of tax law except

Describe the components of tax practice.

Capital recoveries increase the adjusted basis of an asset.

CPA Associates, a cash- basis partnership with a calendar tax year, signs a contract for a 20- month subscription to an online tax research service, effective as of April 1. The firm pays the full $10,000 subscription bill on the April 1, 2018 subscription start date. For 2018 the firm can deduct

The primary objective of the federal income tax law is to achieve various economic and social policy objectives.

Lester, a widower qualifying as a surviving spouse, has $209,000 of salary, five personal and dependency exemptions and itemizes deductions. Lester must use which form to report his taxable income?

A daughter or son may not satisfy the criteria to be considered a qualifying child but may still qualify as a dependent.

Hope receives an $18,500 scholarship from State University. The university specifies that $8,500 is for tuition, books, supplies, and equipment, while $10,000 is for room and board. In addition, Hope works part- time at the campus library and earns $5,000. Hope's gross income is

Charitable contributions made to individuals are deductible if the individuals can show extreme financial need.

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

Which of the following statements regarding the qualified tuition plans (QTP) is incorrect?

If a corporation distributes appreciated property to its shareholders, the corporation will recognize any realized gain.

Accelerated death benefits from a life insurance policy received by a terminally ill person may be excluded from taxable income.

Which of the following statements is not true with regard to like- kind exchanges?

Partnerships, S corporations, and personal service corporations may elect a taxable year which results in a tax deferral of four months or less.

Reva and Josh Lewis had alternative minimum taxable income of $1,050,000 in 2018 and file a joint return. For purposes of computing the alternative minimum tax, their exemption is

A purchaser of the assets of a business must allocate the purchase price to the individual assets in accordance with the written agreement between the purchaser and the seller. Which of the following assets would be least preferred for purposes of allocating value from the purchaser point of view?

All of the following are executive (administrative) sources of tax law except

Describe the components of tax practice.

Capital recoveries increase the adjusted basis of an asset.

CPA Associates, a cash- basis partnership with a calendar tax year, signs a contract for a 20- month subscription to an online tax research service, effective as of April 1. The firm pays the full $10,000 subscription bill on the April 1, 2018 subscription start date. For 2018 the firm can deduct

The primary objective of the federal income tax law is to achieve various economic and social policy objectives.

Lester, a widower qualifying as a surviving spouse, has $209,000 of salary, five personal and dependency exemptions and itemizes deductions. Lester must use which form to report his taxable income?

A daughter or son may not satisfy the criteria to be considered a qualifying child but may still qualify as a dependent.

Hope receives an $18,500 scholarship from State University. The university specifies that $8,500 is for tuition, books, supplies, and equipment, while $10,000 is for room and board. In addition, Hope works part- time at the campus library and earns $5,000. Hope's gross income is

Charitable contributions made to individuals are deductible if the individuals can show extreme financial need.

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