Question 1

The standard mileage rate encompasses all of the following auto costs except for:

Accepted Answer

A)  Depreciation or lease payments. 
B)  Auto property taxes. 
C)  Maintenance and repairs. 
D)  Gasoline,oil,and insurance. 
A)  Depreciation or lease payments. 
B)  Auto property taxes. 
C)  Maintenance and repairs. 
D)  Gasoline,oil,and insurance.

Question 2

Under MACRS,the half-year convention is used for all real property.

Accepted Answer

A) True 
 B)False

Question 3

Tonia acquires the following 5-year class property in 2014:

Accepted Answer

@#IMG-DLM& Tonia does not elect §179 or bonus depr

Question 4

On April 23,2014,Bailey purchased an automobile for $25,000.The car is used 80% for business and 20% for personal use.What is the cost recovery deduction for 2014 and 2015 assuming the 50% bonus was taken? (Round answers to the nearest dollar)

Accepted Answer

2014 $25,000 × 80% × 50% = $10,000 but l

Question 5

If property is inherited,the property's basis for purposes of depreciation is the same as the decedent's basis.

Accepted Answer

A) True 
 B)False

Question 6

The standard mileage rate includes parking fees,tolls,and property taxes on the vehicle.

Accepted Answer

A) True 
 B)False

Question 7

Alice is a high school teacher who enjoys knitting.She knits scarves and sweaters and sells them in a local boutique.Alice spends 10 to 15 hours a week knitting the scarves and sweaters.Alice had sales of $6,000 and expenses of $10,000 related to knitting and selling the goods.Alice's $10,000 of expenses consisted of $800 of interest expense and $1,600 in property taxes for her building and tools,$3,000 in supplies,and $4,600 in depreciation charges.How would Alice's income and expenses be reported on her tax return if her knitting activity is characterized as a hobby?

Accepted Answer

Alice's income and expenses wo

Question 8

Sole proprietors must pay self-employment tax on 100% of their self-employment income.

Accepted Answer

A) True 
 B)False

Question 9

If property is converted from personal-use property to business property,the depreciable cost basis is which of the following?

Accepted Answer

A)  Cost of the asset. 
B)  FMV of the asset. 
C)  The cost of a new similar asset at the date of conversion. 
D)  The lower of the cost or FMV at the date of conversion. 
A)  Cost of the asset. 
B)  FMV of the asset. 
C)  The cost of a new similar asset at the date of conversion. 
D)  The lower of the cost or FMV at the date of conversion.

Question 10

Oscar bought an $800,000 apartment building on July 28,2014.On August 15,2014,he purchased $300,000 of 5-year class assets.Oscar elects to take the maximum expense on every asset.What is the maximum cost recovery deduction Oscar can take in 2014?

Accepted Answer

@#IMG-DLM& This answer assumes that Osca

Question 11

If an activity is characterized as a hobby,expenses are deductible only to the extent of income from the hobby,subject to certain ordering rules.

Accepted Answer

A) True 
 B)False

Question 12

If inventory is a material amount,what method of accounting is acceptable for a sole proprietorship to use?

Accepted Answer

A)  The cash method. 
B)  Accrual method. 
C)  Hybrid method. 
D)  Both Accrual method and Hybrid method. 
A)  The cash method. 
B)  Accrual method. 
C)  Hybrid method. 
D)  Both Accrual method and Hybrid method.

Question 13

Beau earned $25,000 of net earnings from a tax preparation business that he runs during tax season.He also earned a salary of $95,000 from his full-time job.How much self-employment tax must he pay for 2014? (Round calculations to the nearest dollar)

Accepted Answer

Beau's self-employme

Question 14

The cost of all personal property is recovered using a 200% declining-balance rate under MACRS.

Accepted Answer

A) True 
 B)False

Question 15

For an expense to be ordinary,it must be customary or usual in the taxpayer's particular business.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is incorrect regarding luxury automobile limitations?

Accepted Answer

A)  Passenger autos with a gross weight of less than 6,000 pounds are subject to the limits. 
B)  Light trucks or vans that are less than 6,000 pounds are subject to the limits. 
C)  The limits are reduced further if the business use is less than 100%. 
D)  The luxury limitations do not apply to the Section 179 expense deduction. 
A)  Passenger autos with a gross weight of less than 6,000 pounds are subject to the limits. 
B)  Light trucks or vans that are less than 6,000 pounds are subject to the limits. 
C)  The limits are reduced further if the business use is less than 100%. 
D)  The luxury limitations do not apply to the Section 179 expense deduction.

Question 17

On November 30,2014,Constance purchased an apartment building for $750,000.Determine her cost recovery deduction for 2014 rounded to the nearest dollar?

Accepted Answer

A)  $0. 
B)  $2,400. 
C)  $3,413. 
D)  $26,138. 
A)  $0. 
B)  $2,400. 
C)  $3,413. 
D)  $26,138.

Question 18

Describe each of the depreciation conventions and when each is applicable.

Accepted Answer

(1)Half-Year Convention - The half-year

Question 19

Marcus has two jobs.He works as a night auditor at the Midnight Motel.When his shift at the motel is over,he works as a short order cook at the Break-An-Egg Restaurant.On a typical day,he drives the following distances:   How many miles per day would qualify as transportation expenses for tax purposes?

Accepted Answer

A)  0. 
B)  4. 
C)  12. 
A)  0. 
B)  4. 
C)  12.

Question 20

Trade or business expenses are treated as:

Accepted Answer

A)  Deductible only if the activity had substantial income. 
B)  An itemized deduction if not reimbursed. 
C)  Deductible as itemized deductions subject to the 2% AGI floor. 
D)  Deductible as a for AGI deduction. 
A)  Deductible only if the activity had substantial income. 
B)  An itemized deduction if not reimbursed. 
C)  Deductible as itemized deductions subject to the 2% AGI floor. 
D)  Deductible as a for AGI deduction.

The standard mileage rate encompasses all of the following auto costs except for:

Under MACRS,the half-year convention is used for all real property.

Tonia acquires the following 5-year class property in 2014:

On April 23,2014,Bailey purchased an automobile for $25,000.The car is used 80% for business and 20% for personal use.What is the cost recovery deduction for 2014 and 2015 assuming the 50% bonus was taken? (Round answers to the nearest dollar)

If property is inherited,the property's basis for purposes of depreciation is the same as the decedent's basis.

The standard mileage rate includes parking fees,tolls,and property taxes on the vehicle.

Sole proprietors must pay self-employment tax on 100% of their self-employment income.

If property is converted from personal-use property to business property,the depreciable cost basis is which of the following?

Oscar bought an $800,000 apartment building on July 28,2014.On August 15,2014,he purchased $300,000 of 5-year class assets.Oscar elects to take the maximum expense on every asset.What is the maximum cost recovery deduction Oscar can take in 2014?

If an activity is characterized as a hobby,expenses are deductible only to the extent of income from the hobby,subject to certain ordering rules.

If inventory is a material amount,what method of accounting is acceptable for a sole proprietorship to use?

Beau earned $25,000 of net earnings from a tax preparation business that he runs during tax season.He also earned a salary of $95,000 from his full-time job.How much self-employment tax must he pay for 2014? (Round calculations to the nearest dollar)

The cost of all personal property is recovered using a 200% declining-balance rate under MACRS.

For an expense to be ordinary,it must be customary or usual in the taxpayer's particular business.

Which of the following is incorrect regarding luxury automobile limitations?

On November 30,2014,Constance purchased an apartment building for $750,000.Determine her cost recovery deduction for 2014 rounded to the nearest dollar?

Describe each of the depreciation conventions and when each is applicable.

Trade or business expenses are treated as:

Introduction to Taxation, the Income Tax Formula, and Form 1040ez

Expanded Tax Formula, Forms 1040a and 1040, and Basic Concepts

Gross Income: Inclusions and Exclusions

Adjustments for Adjusted Gross Income

Itemized Deductions

Capital Gains and Other Sales of Property

Rental Property, Royalties, and Income From Flow-Through Entities

Tax Credits

Payroll Taxes

Retirement and Other Tax-Deferred Plans and Annuities

Special Property Transactions

At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Partnership Taxation

Corporate Taxation

Filters

Exam 6: Self-Employed Business Income

The standard mileage rate encompasses all of the following auto costs except for:

Under MACRS,the half-year convention is used for all real property.

Tonia acquires the following 5-year class property in 2014:

On April 23,2014,Bailey purchased an automobile for $25,000.The car is used 80% for business and 20% for personal use.What is the cost recovery deduction for 2014 and 2015 assuming the 50% bonus was taken? (Round answers to the nearest dollar)

If property is inherited,the property's basis for purposes of depreciation is the same as the decedent's basis.

The standard mileage rate includes parking fees,tolls,and property taxes on the vehicle.

Sole proprietors must pay self-employment tax on 100% of their self-employment income.

If property is converted from personal-use property to business property,the depreciable cost basis is which of the following?

Oscar bought an $800,000 apartment building on July 28,2014.On August 15,2014,he purchased $300,000 of 5-year class assets.Oscar elects to take the maximum expense on every asset.What is the maximum cost recovery deduction Oscar can take in 2014?

If an activity is characterized as a hobby,expenses are deductible only to the extent of income from the hobby,subject to certain ordering rules.

If inventory is a material amount,what method of accounting is acceptable for a sole proprietorship to use?

Beau earned $25,000 of net earnings from a tax preparation business that he runs during tax season.He also earned a salary of $95,000 from his full-time job.How much self-employment tax must he pay for 2014? (Round calculations to the nearest dollar)

The cost of all personal property is recovered using a 200% declining-balance rate under MACRS.

For an expense to be ordinary,it must be customary or usual in the taxpayer's particular business.

Which of the following is incorrect regarding luxury automobile limitations?

On November 30,2014,Constance purchased an apartment building for $750,000.Determine her cost recovery deduction for 2014 rounded to the nearest dollar?

Describe each of the depreciation conventions and when each is applicable.

Trade or business expenses are treated as:

Introduction to Taxation, the Income Tax Formula, and Form 1040ez

Expanded Tax Formula, Forms 1040a and 1040, and Basic Concepts

Gross Income: Inclusions and Exclusions

Adjustments for Adjusted Gross Income

Itemized Deductions

Capital Gains and Other Sales of Property

Rental Property, Royalties, and Income From Flow-Through Entities

Tax Credits

Payroll Taxes

Retirement and Other Tax-Deferred Plans and Annuities

Special Property Transactions

At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Partnership Taxation

Corporate Taxation

Filters