Mr. Vernon owns stock in two S corporations, Able Corporation and Benson Inc. This year, Mr. Vernon had the following income and loss items. \[\begin{array} { | l | c | } \hline \text { Salary } & \$ 74,000 \\ \hline \text { Business income from Able } & \$ 20,000 \\ \hline \text { Business loss from Bensen } & \$ ( 33,000 ) \\ \hline \end{array}\] If Vernon materially participates in Able's business but not in Benson's business, compute his AGI.

A) $94,000 B) $74,000 C) $61,000 D) $41,000 A) $94,000 B) $74,000 C) $61,000 D) $41,000

Ms. Watts owns stock in two S corporations, MKP Corporation and Reynolds Inc. This year, Ms. Watts had the following income and loss items. \[\begin{array} { | l | c | } \hline \text { Salary } & \$ 113,700 \\ \hline \text { Business income from MKP } & \$ 42,000 \\ \hline \text { Business loss from Reynolds } & \$ ( 28,000 ) \\ \hline \end{array}\] If Ms. Watts materially participates in the business of both corporations, compute her AGI.

A) $85,700 B) $113,700 C) $127,700 D) $155,700 A) $85,700 B) $113,700 C) $127,700 D) $155,700

In 2014, Mrs. Owens paid $50,000 for 3,000 shares of a mutual fund and elected to reinvest year-end dividends in additional shares. In 2014 and 2015, she received Form 1099s reporting the following. \[\begin{array} { | c | c | c | c | c | } \hline & \begin{array} { c } \text { Reinverted } \\ \text { dividen } \end{array} & \begin{array} { c } \text { Sharer } \\ \text { Pwrhaned } \end{array} & \begin{array} { c } \text { Price } \\ \text { mer } \end{array} & \begin{array} { c } \text { Totaluharer } \\ \text { owned } \end{array} \\ \hline 2014 & \$ 4,800 & 240 & \$ 20 & 3,240 \\ \hline 2015 & \$ 3,150 & 150 & \$ 21 & 3,390 \\ \hline \end{array}\] If Mrs. Owens sells 1,000 shares in 2016 for $22 per share and uses the average basis method, compute her recognized gain.

A) $4,910 B) $5,333 C) $3,883 D) $0 A) $4,910 B) $5,333 C) $3,883 D) $0

Tom Johnson, whose marginal tax rate on ordinary income is 35%, sold four investment assets resulting in the following capital gains and losses. \[\begin{array} { | l | r | } \hline \text { short-tern capital gair } & \$ 3,800 \\ \hline \text { \$hort-term capital loss } & \$ ( 5,000 ) \\ \hline \text { Iong-tern capital gair } & \$ 39,000 \\ \hline \text { Iong-tern capital loss } & \$ ( 35,100 ) \\ \hline \end{array}\] How much of Tom's net capital gain is taxed at 15%?

A) $42,800 B) $3,900 C) $2,700 D) $0 A) $42,800 B) $3,900 C) $2,700 D) $0

Mr. and Mrs. Philips recognized the following capital gains and losses this year. \[\begin{array} { | l | c | } \hline \text { Yhort-tern capital gair } & \$ 10,000 \\ \hline \text { Ehort-tern capital loss } & \$ ( 4,000 ) \\ \hline \text { Iong-tern capital gain } & \$ 45,000 \\ \hline \text { Iorg-tern capital loss } & \$ 60,000 ) \\ \hline \end{array}\] Their AGI before consideration of these gains and losses was $140,000. Compute their AGI.

A) $140,000 B) $131,000 C) $137,000 D) $143,000 A) $140,000 B) $131,000 C) $137,000 D) $143,000

Exam 16: Investment and Personal Financial Planning

Mr. McCann died this year. During his lifetime, he made taxable gifts significantly in excess of his lifetime exclusion. Mr. McCann's taxable estate was $21.9 million. Compute the estate tax on this estate.

(Multiple Choice)

4.8/5

(70)

Question 81

Mr. Vernon owns stock in two S corporations, Able Corporation and Benson Inc. This year, Mr. Vernon had the following income and loss items. Salary \ 74,000 Business income from Able \ 20,000 Business loss from Bensen \ (33,000) If Vernon materially participates in Able's business but not in Benson's business, compute his AGI.

(Multiple Choice)

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Question 82

Which of the following statements about Section 1244 stock is true?

(Multiple Choice)

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(71)

Question 83

Mr. Moyer owns residential rental property. This year, he received $7,000 revenue from the tenants and incurred $14,900 rental expenses. Mr. Moyer must include $7,000 in gross income and is allowed only $7,000 of above-the-line deductions for the expenses.

(True/False)

4.9/5

(87)

Question 84

Ms. Poppe, a single taxpayer, made three gifts this year: $6,300 cash to her niece; $50,000 cash to Yale University; and 5,000 acres of land to her brother. Ms. Poppe's tax basis in the land was $400,000, and its fair market value of date of gift was $615,000. Compute Ms. Poppe's taxable gifts for the year.

(Multiple Choice)

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Question 85

Mr. Lee made the following transfers this year. Which of the transfers are treated as gifts for federal tax purposes?

(Multiple Choice)

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Question 86

Which of the following statements about investment property is false?

(Multiple Choice)

4.8/5

(88)

Question 87

Which of the following statements about an investment in undeveloped land is false?

(Multiple Choice)

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Question 88

Lana owns 50 shares of stock qualifying as Section 1244 stock. If she sells the stock to George, he can also treat the stock as Section 1244 stock.

(True/False)

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Question 89

The cash surrender value of a life insurance policy is taxable to the policy beneficiary upon the death of the insured individual.

(True/False)

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(83)

Question 90

Six years ago, Mr. Ahmed loaned $10,000 to a neighbor in exchange for an interest-bearing debt obligation. This year, the neighbor informed Mr. Ahmed that he was defaulting on the debt. What are the tax consequences to Mr. Ahmed of this bad debt?

(Multiple Choice)

4.9/5

(75)

Question 91

Ms. Watts owns stock in two S corporations, MKP Corporation and Reynolds Inc. This year, Ms. Watts had the following income and loss items. Salary \ 113,700 Business income from MKP \ 42,000 Business loss from Reynolds \ (28,000) If Ms. Watts materially participates in the business of both corporations, compute her AGI.

(Multiple Choice)

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(74)

Question 92

Electing to reinvest dividends in additional shares of stock does not defer income recognition.

(True/False)

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(86)

Question 93

In 2014, Mrs. Owens paid $50,000 for 3,000 shares of a mutual fund and elected to reinvest year-end dividends in additional shares. In 2014 and 2015, she received Form 1099s reporting the following. Reinverted dividen Sharer Pwrhaned Price mer Totaluharer owned 2014 \ 4,800 240 \ 20 3,240 2015 \ 3,150 150 \ 21 3,390 If Mrs. Owens sells 1,000 shares in 2016 for $22 per share and uses the average basis method, compute her recognized gain.

(Multiple Choice)

4.9/5

(88)

Question 94

Tom Johnson, whose marginal tax rate on ordinary income is 35%, sold four investment assets resulting in the following capital gains and losses. short-tern capital gair \ 3,800 \hort -term capital loss \ (5,000) Iong-tern capital gair \ 39,000 Iong-tern capital loss \ (35,100) How much of Tom's net capital gain is taxed at 15%?

(Multiple Choice)

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Question 95

Mr. and Mrs. Philips recognized the following capital gains and losses this year. Yhort-tern capital gair \ 10,000 Ehort-tern capital loss \ (4,000) Iong-tern capital gain \ 45,000 Iorg-tern capital loss \ 60,000) Their AGI before consideration of these gains and losses was $140,000. Compute their AGI.

(Multiple Choice)

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(83)

Question 96

If an investor sells some of the securities in a block but can't identify which ones were sold, she is presumed to have sold the securities with the latest acquisition date.

(True/False)

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(88)

Question 97

Three years ago, Mr. Lewis paid $40,000 for a newly issued corporate bond with a $50,000 stated redemption value. This year, he sold the bond for $43,900. Through date of sale, Mr. Lewis recognized $940 of the original issue discount (OID) as accrued interest income. Compute his gain or loss on sale.

(Multiple Choice)

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(75)

Question 98

Mr. and Mrs. Gupta want to make cash gifts to each of their four children, the children's four spouses, and three grandchildren. Compute the total amount that the Guptas can transfer to their younger-generation family members without making a taxable gift for the year.

(Multiple Choice)

5.0/5

(73)

Question 99

At the beginning of the year, Calvin paid $5,000 for 60 shares of Eddington stock. In June, he received a $300 cash distribution with respect to the stock. His Form 1099-DIV reported that $170 was an ordinary dividend and $130 was nontaxable. Compute Calvin's tax basis in his 60 shares at year-end.

(Multiple Choice)

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(69)

Question 100

Showing 81 - 100 of 108

Mr. McCann died this year. During his lifetime, he made taxable gifts significantly in excess of his lifetime exclusion. Mr. McCann's taxable estate was $21.9 million. Compute the estate tax on this estate.

Which of the following statements about Section 1244 stock is true?

Mr. Moyer owns residential rental property. This year, he received $7,000 revenue from the tenants and incurred $14,900 rental expenses. Mr. Moyer must include $7,000 in gross income and is allowed only $7,000 of above-the-line deductions for the expenses.

Mr. Lee made the following transfers this year. Which of the transfers are treated as gifts for federal tax purposes?

Which of the following statements about investment property is false?

Which of the following statements about an investment in undeveloped land is false?

Lana owns 50 shares of stock qualifying as Section 1244 stock. If she sells the stock to George, he can also treat the stock as Section 1244 stock.

The cash surrender value of a life insurance policy is taxable to the policy beneficiary upon the death of the insured individual.

Six years ago, Mr. Ahmed loaned $10,000 to a neighbor in exchange for an interest-bearing debt obligation. This year, the neighbor informed Mr. Ahmed that he was defaulting on the debt. What are the tax consequences to Mr. Ahmed of this bad debt?

Electing to reinvest dividends in additional shares of stock does not defer income recognition.

If an investor sells some of the securities in a block but can't identify which ones were sold, she is presumed to have sold the securities with the latest acquisition date.

Mr. and Mrs. Gupta want to make cash gifts to each of their four children, the children's four spouses, and three grandchildren. Compute the total amount that the Guptas can transfer to their younger-generation family members without making a taxable gift for the year.

At the beginning of the year, Calvin paid $5,000 for 60 shares of Eddington stock. In June, he received a $300 cash distribution with respect to the stock. His Form 1099-DIV reported that $170 was an ordinary dividend and $130 was nontaxable. Compute Calvin's tax basis in his 60 shares at year-end.

Taxes and Taxing Jurisdictions

Policy Standards for a Good Tax

Taxes As Transaction Costs

Maxims of Income Tax Planning

Tax Research

Taxable Income From Business Operations

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Nontaxable Exchanges

Sole Proprietorships, Partnerships, Llcs, and S Corporations

The Corporate Taxpayer

The Choice of Business Entity

Jurisdictional Issues in Business Taxation

The Individual Tax Formula

Compensation and Retirement Planning

Tax Consequences of Personal Activities

The Tax Compliance Process

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