Question 1

In calculating depletion of natural resources each period,

Accepted Answer

A)  percentage depletion must be used. 
B)  the greater of cost depletion or percentage depletion must be used. 
C)  cost depletion must be used. 
D)  the smaller of cost depletion or percentage depletion must be used. 
A)  percentage depletion must be used. 
B)  the greater of cost depletion or percentage depletion must be used. 
C)  cost depletion must be used. 
D)  the smaller of cost depletion or percentage depletion must be used.

Question 2

Julia owns 1,000 shares of Orange Corporation. This year, Orange declared a 10% stock dividend. There was no option for shareholders to receive cash. When Julia received 100 shares of Orange stock, it had a fair market value of $50 a share. How much income does Julia have from the dividend?

Accepted Answer

A)  $5,000 
B)  $0 
C)  $50 
D)  $50,000 
A)  $5,000 
B)  $0 
C)  $50 
D)  $50,000

Question 3

Refundable tax credits

Accepted Answer

A)  allow the excess over the taxpayer's tax liability to be paid to the taxpayer. 
B)  may only be used if the taxpayer is receiving a refund. 
C)  only offset a taxpayer's tax liability. 
D)  have all expired but may be reinstated with new tax legislation. 
A)  allow the excess over the taxpayer's tax liability to be paid to the taxpayer. 
B)  may only be used if the taxpayer is receiving a refund. 
C)  only offset a taxpayer's tax liability. 
D)  have all expired but may be reinstated with new tax legislation.

Question 4

Self- employed individuals are subject to the self- employment tax if their net earnings are more than $600.

Accepted Answer

A) True 
 B)False

Question 5

A nursing home maintains a cafeteria that is used by employees, patients, and visitors. The value of free meals provided to employees while on duty so that they may be available for emergency calls is not taxable.

Accepted Answer

A) True 
 B)False

Question 6

Runway Corporation has $2 million of gross receipts in the preceding year. For purposes of the disabled access credit, what is the maximum number of full- time employees the corporation can have in the preceding year?

Accepted Answer

A)  15 
B)  20 
C)  10 
D)  30 
A)  15 
B)  20 
C)  10 
D)  30

Question 7

Sec. 1245 ordinary income recapture can apply to buildings placed in service prior to 1987.

Accepted Answer

A) True 
 B)False

Question 8

During the current year, Charlene borrows $10,000 to purchase Kansas City bonds. Charlene incurs $800 of interest on her outstanding loan. How much interest expense may Charlene deduct in the current year?

Accepted Answer

$0. Charlene may not deduct an

Question 9

Shafiq, age 16, works part- time at the local supermarket after school and on vacations. He plans to open a Roth IRA to save for his future. Shafiq makes less than $10,000 per year. He can take advantage of the qualified retirement savings contributions credit ("saver's credit").

Accepted Answer

A) True 
 B)False

Question 10

Jan purchased an antique desk at auction. For two years, the desk sat in Jan's garage until she decided to restore it. This year, while cleaning and restoring the desk, Jan discovered $1,500 in a hidden compartment inside one drawer. With respect to the $1,500, Jan must

Accepted Answer

A)  report only $750 due to the statute of limitations. 
B)  report $1,500 on this year's tax return. 
C)  amend her previous tax return and report the $1,500. 
D)  report nothing. 
A)  report only $750 due to the statute of limitations. 
B)  report $1,500 on this year's tax return. 
C)  amend her previous tax return and report the $1,500. 
D)  report nothing.

Question 11

The general form of the annualized after- tax rate of return (annualized ATROR) for the Deferred Model can be expressed as

Accepted Answer

A)  rann = [(1 + R)n(1 - tn) + tn]1/n - 1. 
B)  rann = [(1 + R)n(1 + t) + t]1/n - 1. 
C)  rann = [(1 + R)n(1 + t) - t]1/n - 1. 
D)  rann = [(1 - R)n(1 - t) + t]1/n - 1. 
A)  rann = [(1 + R)n(1 - tn) + tn]1/n - 1. 
B)  rann = [(1 + R)n(1 + t) + t]1/n - 1. 
C)  rann = [(1 + R)n(1 + t) - t]1/n - 1. 
D)  rann = [(1 - R)n(1 - t) + t]1/n - 1.

Question 12

Last year, Abby loaned her friend, Pat, $10,000. Although Pat had signed a note payable that contained interest payments and a maturity date, the loan had not been repaid this year when Pat died insolvent. For this year, assuming that the loan was bona fide, Abby should account for nonpayment of the loan as a(n)

Accepted Answer

A)  long- term capital loss. 
B)  itemized deduction. 
C)  short- term capital loss. 
D)  ordinary loss. 
A)  long- term capital loss. 
B)  itemized deduction. 
C)  short- term capital loss. 
D)  ordinary loss.

Question 13

The computer is the primary tool of the tax professional. The tax professional uses the computer for all of the following client services except

Accepted Answer

A)  tax planning for clients. 
B)  investment purchases on behalf of clients. 
C)  tax return preparation. 
D)  tax research for client questions. 
A)  tax planning for clients. 
B)  investment purchases on behalf of clients. 
C)  tax return preparation. 
D)  tax research for client questions.

Question 14

Amber receives a residence ($750,000 FMV, $500,000 adjusted basis) owned for eight years by Jonathan, her former spouse, as part of a divorce settlement. Amber and Jonathan had lived in the home for the four years before the divorce. Seven months after the transfer of the residence, Amber sells it for $790,000. What is the amount of Amber's recognized gain on the sale of the home?

Accepted Answer

Amber's realized gain is ($790,000 - $50

Question 15

Educational expenses incurred by a self- employed bookkeeper for courses necessary to sit for the CPA exam are fully deductible.

Accepted Answer

A) True 
 B)False

Question 16

Terra Corp. purchased a new enterprise software system and incurred the following costs:   What is Terra Corp.'s basis in the software system?

Accepted Answer

A)  $800,000 
B)  $811,000 
C)  $805,000 
D)  $820,000 
A)  $800,000 
B)  $811,000 
C)  $805,000 
D)  $820,000

Question 17

"No additional cost" benefits are excluded from an employee's gross income if the services are the same type that are sold to customers and in the line of business in which the employee works.

Accepted Answer

A) True 
 B)False

Question 18

Richard is a key employee of Winn Corporation. The corporation provides Richard with $120,000 of group- term life insurance coverage. Only company executives receive life insurance coverage. The premium attributable to the coverage is $1,600. The uniform one- month group- term premium is one dollar per $1,000 of coverage. How much must Richard include in income due to the policy?

Accepted Answer

A)  $1,600 
B)  $840 
C)  $0 
D)  $1,440 
A)  $1,600 
B)  $840 
C)  $0 
D)  $1,440

Question 19

In a limited liability partnership, a partner is not liable for his partner's acts of negligence or misconduct.

Accepted Answer

A) True 
 B)False

Question 20

While points paid to purchase a residence are deductible as interest in the period paid, points associated with the refinancing of a residence must be amortized and deducted over the life of the loan.

Accepted Answer

A) True 
 B)False

In calculating depletion of natural resources each period,

Julia owns 1,000 shares of Orange Corporation. This year, Orange declared a 10% stock dividend. There was no option for shareholders to receive cash. When Julia received 100 shares of Orange stock, it had a fair market value of $50 a share. How much income does Julia have from the dividend?

Refundable tax credits

Self- employed individuals are subject to the self- employment tax if their net earnings are more than $600.

A nursing home maintains a cafeteria that is used by employees, patients, and visitors. The value of free meals provided to employees while on duty so that they may be available for emergency calls is not taxable.

Runway Corporation has $2 million of gross receipts in the preceding year. For purposes of the disabled access credit, what is the maximum number of full- time employees the corporation can have in the preceding year?

Sec. 1245 ordinary income recapture can apply to buildings placed in service prior to 1987.

During the current year, Charlene borrows $10,000 to purchase Kansas City bonds. Charlene incurs $800 of interest on her outstanding loan. How much interest expense may Charlene deduct in the current year?

Shafiq, age 16, works part- time at the local supermarket after school and on vacations. He plans to open a Roth IRA to save for his future. Shafiq makes less than $10,000 per year. He can take advantage of the qualified retirement savings contributions credit ("saver's credit").

Jan purchased an antique desk at auction. For two years, the desk sat in Jan's garage until she decided to restore it. This year, while cleaning and restoring the desk, Jan discovered $1,500 in a hidden compartment inside one drawer. With respect to the $1,500, Jan must

The general form of the annualized after- tax rate of return (annualized ATROR) for the Deferred Model can be expressed as

The computer is the primary tool of the tax professional. The tax professional uses the computer for all of the following client services except

Educational expenses incurred by a self- employed bookkeeper for courses necessary to sit for the CPA exam are fully deductible.

Terra Corp. purchased a new enterprise software system and incurred the following costs: What is Terra Corp.'s basis in the software system?

"No additional cost" benefits are excluded from an employee's gross income if the services are the same type that are sold to customers and in the line of business in which the employee works.

In a limited liability partnership, a partner is not liable for his partner's acts of negligence or misconduct.

While points paid to purchase a residence are deductible as interest in the period paid, points associated with the refinancing of a residence must be amortized and deducted over the life of the loan.

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

In calculating depletion of natural resources each period,

Julia owns 1,000 shares of Orange Corporation. This year, Orange declared a 10% stock dividend. There was no option for shareholders to receive cash. When Julia received 100 shares of Orange stock, it had a fair market value of $50 a share. How much income does Julia have from the dividend?

Refundable tax credits

Self- employed individuals are subject to the self- employment tax if their net earnings are more than $600.

A nursing home maintains a cafeteria that is used by employees, patients, and visitors. The value of free meals provided to employees while on duty so that they may be available for emergency calls is not taxable.

Runway Corporation has $2 million of gross receipts in the preceding year. For purposes of the disabled access credit, what is the maximum number of full- time employees the corporation can have in the preceding year?

Sec. 1245 ordinary income recapture can apply to buildings placed in service prior to 1987.

During the current year, Charlene borrows $10,000 to purchase Kansas City bonds. Charlene incurs $800 of interest on her outstanding loan. How much interest expense may Charlene deduct in the current year?

Shafiq, age 16, works part- time at the local supermarket after school and on vacations. He plans to open a Roth IRA to save for his future. Shafiq makes less than $10,000 per year. He can take advantage of the qualified retirement savings contributions credit ("saver's credit").

Jan purchased an antique desk at auction. For two years, the desk sat in Jan's garage until she decided to restore it. This year, while cleaning and restoring the desk, Jan discovered $1,500 in a hidden compartment inside one drawer. With respect to the $1,500, Jan must

The general form of the annualized after- tax rate of return (annualized ATROR) for the Deferred Model can be expressed as

The computer is the primary tool of the tax professional. The tax professional uses the computer for all of the following client services except

Educational expenses incurred by a self- employed bookkeeper for courses necessary to sit for the CPA exam are fully deductible.

Terra Corp. purchased a new enterprise software system and incurred the following costs: What is Terra Corp.'s basis in the software system?

"No additional cost" benefits are excluded from an employee's gross income if the services are the same type that are sold to customers and in the line of business in which the employee works.

In a limited liability partnership, a partner is not liable for his partner's acts of negligence or misconduct.

While points paid to purchase a residence are deductible as interest in the period paid, points associated with the refinancing of a residence must be amortized and deducted over the life of the loan.

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