Question 1

Polly received the following items this year.   Compute Polly's gross income.

Accepted Answer

A) $59,600 
B) $58,000 
C) $53,000 
D) $50,000 
A) $59,600 
B) $58,000 
C) $53,000 
D) $50,000

Question 2

Which of the following donations does not qualify as a charitable contribution for federal tax purposes?

Accepted Answer

A) $50 cash given to a homeless panhandler 
B) Used furniture valued at $300 given to the Salvation Army 
C) $3,000 cash given to the University of Georgia 
D) $600 cash given to the Boy Scouts of America 
A) $50 cash given to a homeless panhandler 
B) Used furniture valued at $300 given to the Salvation Army 
C) $3,000 cash given to the University of Georgia 
D) $600 cash given to the Boy Scouts of America

Question 3

Ms. Bjorn's only contribution this year was a donation of marketable securities (FMV $600,000; tax basis $273,000) to a public charity. Her AGI was $814,000. Which of the following statements is true?

Accepted Answer

A) Ms.Bjorn's charitable contribution deduction is limited to $407,000, and she has a $193,000 contribution carryover to future years. 
B) Ms.Bjorn's charitable contribution deduction is $273,000. 
C) Ms.Bjorn's charitable contribution deduction is limited to $407,000.The $193,000 nondeductible amount will never result in a tax benefit. 
D) Ms.Bjorn's charitable contribution deduction is $600,000. 
A) Ms.Bjorn's charitable contribution deduction is limited to $407,000, and she has a $193,000 contribution carryover to future years. 
B) Ms.Bjorn's charitable contribution deduction is $273,000. 
C) Ms.Bjorn's charitable contribution deduction is limited to $407,000.The $193,000 nondeductible amount will never result in a tax benefit. 
D) Ms.Bjorn's charitable contribution deduction is $600,000.

Question 4

For federal income tax purposes, a taxpayer may elect to deduct state and local sales taxes as an itemized deduction.

Accepted Answer

A) True 
 B)False

Question 5

Mr. and Mrs. Perry own three personal residences, all of which are subject to an acquisition mortgage. The mortgage on the first residence is $290,000, the mortgage on the second residence is $400,000, and the mortgage on the third residence is $357,000. Which of the following statements is true?

Accepted Answer

A) Mr.and Mrs.Perry can report an itemized deduction for the interest paid on all three mortgages. 
B) The Perrys' itemized deduction is limited to the interest on $1 million of their acquisition debt. 
C) The Perrys' itemized deduction is limited to the interest on the $400,000 mortgage. 
D) None of the statements is true. 
A) Mr.and Mrs.Perry can report an itemized deduction for the interest paid on all three mortgages. 
B) The Perrys' itemized deduction is limited to the interest on $1 million of their acquisition debt. 
C) The Perrys' itemized deduction is limited to the interest on the $400,000 mortgage. 
D) None of the statements is true.

Question 6

Which of the following deductions is allowed in the computation of alternative minimum taxable income (AMTI)?

Accepted Answer

A) Property taxes paid on a personal residence. 
B) Interest paid on a mortgage incurred to purchase a personal residence. 
C) Interest paid on a home equity debt. 
D) All of the above deductions are allowed. 
A) Property taxes paid on a personal residence. 
B) Interest paid on a mortgage incurred to purchase a personal residence. 
C) Interest paid on a home equity debt. 
D) All of the above deductions are allowed.

Question 7

This year, Mr. and Mrs. Franklin paid $93,000 interest on a mortgage they incurred to build their home in Santa Fe. The average principal balance of the mortgage was $1.43 million. The home has an appraised FMV of only $900,000. Compute the Franklin's itemized deduction for their home mortgage interest.

Accepted Answer

A) $65,035 
B) $58,531 
C) $93,000 
D) None of the above 
A) $65,035 
B) $58,531 
C) $93,000 
D) None of the above

Question 8

A thief broke into Kate's condominium and stole her laptop computer. Kate purchased the computer for $1,400, but its current value is only $300. Kate's casualty loss is $1,400.

Accepted Answer

A) True 
 B)False

Question 9

An unused charitable contribution deduction may be carried forward five years.

Accepted Answer

A) True 
 B)False

Question 10

Mr. and Mrs. Alvarez paid $130,000 for their home 30 years ago. They recently sold this home and moved into a retirement apartment. Describe the tax consequences of the sale assuming that the amount realized was:
a. $125,000
b. $450,000
c. $850,000

Accepted Answer

a. $(5,000) loss realized; $0 recognized

Question 11

Mr. Lightfoot owns three mortgaged residences that he occupies at different times of the year. He can treat the interest paid on only one mortgage as qualified residence interest.

Accepted Answer

A) True 
 B)False

Question 12

Mr. and Mrs. Blake suffered two casualty losses this year. Mr. Blake's wallet containing $1,300 cash was stolen, and their uninsured sailboat (basis $67,000; FMV $50,000) sank after colliding with a reef. Compute the Blakes' itemized deduction for casualty losses if their AGI was $112,200.

Accepted Answer

A) $40,080 
B) $56,080 
C) $39,980 
D) None of the above. 
A) $40,080 
B) $56,080 
C) $39,980 
D) None of the above.

Question 13

Ben received a $5,000 tuition scholarship from his local community college. He can exclude the $5,000 from gross income.

Accepted Answer

A) True 
 B)False

Question 14

Six years ago, Milo Lenz, an amateur artist, sculpted a garden gnome as a gift for his mother. This year, his mother sold the gnome on eBay for $1,200. What is the amount and character of the mother's gain?

Accepted Answer

A) No gain recognized on the sale of a personal asset. 
B) $1,200 ordinary gain. 
C) $1,200 long-term capital gain. 
D) None of the above. 
A) No gain recognized on the sale of a personal asset. 
B) $1,200 ordinary gain. 
C) $1,200 long-term capital gain. 
D) None of the above.

Question 15

Which of the following statements about divorce settlements is true?

Accepted Answer

A) Property transfers pursuant to divorce have no income tax consequences. 
B) Child support is excluded from the recipient's gross income. 
C) Child support is an above-the-line deduction for the payer. 
D) Statements A.and B.are true. 
A) Property transfers pursuant to divorce have no income tax consequences. 
B) Child support is excluded from the recipient's gross income. 
C) Child support is an above-the-line deduction for the payer. 
D) Statements A.and B.are true.

Question 16

Taxpayers include a maximum of 85% of Social Security benefits in gross income.

Accepted Answer

A) True 
 B)False

Question 17

Josh donated a painting to the local art museum. He purchased the painting twenty years ago for $34,000, and its appraised FMV at date of gift was $115,000. Which of the following statements about this donation is true?

Accepted Answer

A) Josh must recognize an $81,000 long-term capital gain and is allowed a $115,000 charitable contribution deduction. 
B) Josh recognizes no gain and is allowed a $115,000 charitable contribution deduction. 
C) Josh recognizes no gain and is allowed a $34,000 charitable contribution deduction. 
D) None of the above is true. 
A) Josh must recognize an $81,000 long-term capital gain and is allowed a $115,000 charitable contribution deduction. 
B) Josh recognizes no gain and is allowed a $115,000 charitable contribution deduction. 
C) Josh recognizes no gain and is allowed a $34,000 charitable contribution deduction. 
D) None of the above is true.

Question 18

Alimony payments are included in the recipient's gross income.

Accepted Answer

A) True 
 B)False

Question 19

James Dean received the following this year.   Compute James' gross income.

Accepted Answer

A) $12,500 
B) $14,000 
C) $34,000 
D) None of the above. 
A) $12,500 
B) $14,000 
C) $34,000 
D) None of the above.

Question 20

Interest paid on home equity debt is not deductible in computing alternative minimum taxable income (AMTI).

Accepted Answer

A) True 
 B)False

Polly received the following items this year. Compute Polly's gross income.

Which of the following donations does not qualify as a charitable contribution for federal tax purposes?

Ms. Bjorn's only contribution this year was a donation of marketable securities (FMV $600,000; tax basis $273,000) to a public charity. Her AGI was $814,000. Which of the following statements is true?

For federal income tax purposes, a taxpayer may elect to deduct state and local sales taxes as an itemized deduction.

Mr. and Mrs. Perry own three personal residences, all of which are subject to an acquisition mortgage. The mortgage on the first residence is $290,000, the mortgage on the second residence is $400,000, and the mortgage on the third residence is $357,000. Which of the following statements is true?

Which of the following deductions is allowed in the computation of alternative minimum taxable income (AMTI)?

A thief broke into Kate's condominium and stole her laptop computer. Kate purchased the computer for $1,400, but its current value is only $300. Kate's casualty loss is $1,400.

An unused charitable contribution deduction may be carried forward five years.

Mr. and Mrs. Alvarez paid $130,000 for their home 30 years ago. They recently sold this home and moved into a retirement apartment. Describe the tax consequences of the sale assuming that the amount realized was: a. $125,000 b. $450,000 c. $850,000

Mr. Lightfoot owns three mortgaged residences that he occupies at different times of the year. He can treat the interest paid on only one mortgage as qualified residence interest.

Mr. and Mrs. Blake suffered two casualty losses this year. Mr. Blake's wallet containing $1,300 cash was stolen, and their uninsured sailboat (basis $67,000; FMV $50,000) sank after colliding with a reef. Compute the Blakes' itemized deduction for casualty losses if their AGI was $112,200.

Ben received a $5,000 tuition scholarship from his local community college. He can exclude the $5,000 from gross income.

Six years ago, Milo Lenz, an amateur artist, sculpted a garden gnome as a gift for his mother. This year, his mother sold the gnome on eBay for $1,200. What is the amount and character of the mother's gain?

Which of the following statements about divorce settlements is true?

Taxpayers include a maximum of 85% of Social Security benefits in gross income.

Josh donated a painting to the local art museum. He purchased the painting twenty years ago for $34,000, and its appraised FMV at date of gift was $115,000. Which of the following statements about this donation is true?

Alimony payments are included in the recipient's gross income.

James Dean received the following this year. Compute James' gross income.

Interest paid on home equity debt is not deductible in computing alternative minimum taxable income (AMTI).

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

Investment and Personal Financial Planning

The Tax Compliance Process a Present Value of $1 B Present Value of Annuity of $1 C 2013 Income Tax Rates

Filters

Exam 17: Tax Consequences of Personal Activities

Polly received the following items this year. Compute Polly's gross income.

Which of the following donations does not qualify as a charitable contribution for federal tax purposes?

Ms. Bjorn's only contribution this year was a donation of marketable securities (FMV $600,000; tax basis $273,000) to a public charity. Her AGI was $814,000. Which of the following statements is true?

For federal income tax purposes, a taxpayer may elect to deduct state and local sales taxes as an itemized deduction.

Mr. and Mrs. Perry own three personal residences, all of which are subject to an acquisition mortgage. The mortgage on the first residence is $290,000, the mortgage on the second residence is $400,000, and the mortgage on the third residence is $357,000. Which of the following statements is true?

Which of the following deductions is allowed in the computation of alternative minimum taxable income (AMTI)?

A thief broke into Kate's condominium and stole her laptop computer. Kate purchased the computer for $1,400, but its current value is only $300. Kate's casualty loss is $1,400.

An unused charitable contribution deduction may be carried forward five years.

Mr. and Mrs. Alvarez paid $130,000 for their home 30 years ago. They recently sold this home and moved into a retirement apartment. Describe the tax consequences of the sale assuming that the amount realized was: a. $125,000 b. $450,000 c. $850,000

Mr. Lightfoot owns three mortgaged residences that he occupies at different times of the year. He can treat the interest paid on only one mortgage as qualified residence interest.

Mr. and Mrs. Blake suffered two casualty losses this year. Mr. Blake's wallet containing $1,300 cash was stolen, and their uninsured sailboat (basis $67,000; FMV $50,000) sank after colliding with a reef. Compute the Blakes' itemized deduction for casualty losses if their AGI was $112,200.

Ben received a $5,000 tuition scholarship from his local community college. He can exclude the $5,000 from gross income.

Six years ago, Milo Lenz, an amateur artist, sculpted a garden gnome as a gift for his mother. This year, his mother sold the gnome on eBay for $1,200. What is the amount and character of the mother's gain?

Which of the following statements about divorce settlements is true?

Taxpayers include a maximum of 85% of Social Security benefits in gross income.

Josh donated a painting to the local art museum. He purchased the painting twenty years ago for $34,000, and its appraised FMV at date of gift was $115,000. Which of the following statements about this donation is true?

Alimony payments are included in the recipient's gross income.

James Dean received the following this year. Compute James' gross income.

Interest paid on home equity debt is not deductible in computing alternative minimum taxable income (AMTI).

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

Investment and Personal Financial Planning

The Tax Compliance Process a Present Value of $1 B Present Value of Annuity of $1 C 2013 Income Tax Rates

Filters