Question 1

Only accrual basis individuals are required to accrue original issue discount on a bond as annual interest income.

Accepted Answer

A) True 
 B)False

Question 2

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.

Accepted Answer

A) $8.760 million 
B) $6.660 million 
C) $7.665 million 
D) The facts are insufficient to compute the estate tax. 
A) $8.760 million 
B) $6.660 million 
C) $7.665 million 
D) The facts are insufficient to compute the estate tax.

Question 3

Mr. and Mrs. Perry own stock in an S corporation, which is their only passive activity. They have an $8,200 passive activity loss carryforward into this year. This year, the Perrys are allocated a $1,600 share of corporate ordinary business income. In December of this year, they recognize a $3,500 long-term capital gain on the sale of their entire stock interest. How much of their loss carryforward can the Perrys deduct this year?

Accepted Answer

A) $0 
B) $5,100 
C) $8,200 
D) $1,600 
A) $0 
B) $5,100 
C) $8,200 
D) $1,600

Question 4

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.

Accepted Answer

A) $386,000 
B) $601,000 
C) $593,300 
D) $637,000 
A) $386,000 
B) $601,000 
C) $593,300 
D) $637,000

Question 5

Mr. Vernon owns stock in two S corporations, Able Corporation and Benson Inc. This year, Mr. Vernon had the following income and loss items.   If Vernon materially participates in Able's business but not in Benson's business, compute his AGI.

Accepted Answer

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

Question 6

Ms. Lopez paid $7,260 interest on a mortgage on undeveloped land that she holds as an investment. Ms. Lopez's AGI is $112,200, which includes $4,900 interest income from a certificate of deposit. Which of the following statements is true?

Accepted Answer

A) Ms.Lopez can't deduct any of the $7,260 interest expense. 
B) Ms.Lopez can deduct $7,260 interest expense as an itemized deduction. 
C) Ms.Lopez can deduct $4,900 interest expense as an itemized deduction. 
D) Ms.Lopez can deduct $4,900 interest expense as an above-the-line deduction. 
A) Ms.Lopez can't deduct any of the $7,260 interest expense. 
B) Ms.Lopez can deduct $7,260 interest expense as an itemized deduction. 
C) Ms.Lopez can deduct $4,900 interest expense as an itemized deduction. 
D) Ms.Lopez can deduct $4,900 interest expense as an above-the-line deduction.

Question 7

Mr. Forest, a single taxpayer, recognized a $252,000 loss on the sale of Section 1244 stock. What is the character of this loss?

Accepted Answer

A) $50,000 ordinary and $202,000 capital 
B) $100,000 ordinary and $152,000 capital 
C) $252,000 capital 
D) $252,000 ordinary 
A) $50,000 ordinary and $202,000 capital 
B) $100,000 ordinary and $152,000 capital 
C) $252,000 capital 
D) $252,000 ordinary

Question 8

Mr. and Mrs. Sturm actively manage an office building that they purchased in January 1997. This year, the office building generated a $68,000 net loss. The couple's income items consisted of $72,300 salary and $14,000 interest and dividend income. How much of the rental loss is deductible this year?

Accepted Answer

A) $25,000 
B) $14,000 
C) $0 
D) $68,000 
A) $25,000 
B) $14,000 
C) $0 
D) $68,000

Question 9

Investment interest expense is a miscellaneous itemized deduction subject to the 2% AGI limitation.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

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.

Accepted Answer

A) $4,870 
B) $4,700 
C) $4,830 
D) $5,000 
A) $4,870 
B) $4,700 
C) $4,830 
D) $5,000

Question 12

Lindsey owns and actively manages an apartment complex. This year, the complex generated a $40,300 net loss. If Lindsey's AGI before considering this loss is $118,200 and she owns no other passive activities, how much of the loss is deductible this year?

Accepted Answer

A) $0 
B) $9,100 
C) $25,000 
D) None of the above 
A) $0 
B) $9,100 
C) $25,000 
D) None of the above

Question 13

Individual taxpayers are not allowed to deduct capital losses in excess of capital gains.

Accepted Answer

A) True 
 B)False

Question 14

Unrecaptured Section 1250 gain is taxed at a maximum rate of 28%.

Accepted Answer

A) True 
 B)False

Question 15

Mr. Quinn recognized a $900 net short-term capital gain and a $1,380 long-term capital gain this year. Which of the following statements is false?

Accepted Answer

A) If Mr.Quinn's marginal tax rate on ordinary income is 15%, the income tax on his capital gains is $135. 
B) If Mr.Quinn's marginal tax rate on ordinary income is 39.6%, the income tax on his capital gains is $632. 
C) Only $1,380 of the capital gain is subject to a preferential tax rate. 
D) None of the above is false. 
A) If Mr.Quinn's marginal tax rate on ordinary income is 15%, the income tax on his capital gains is $135. 
B) If Mr.Quinn's marginal tax rate on ordinary income is 39.6%, the income tax on his capital gains is $632. 
C) Only $1,380 of the capital gain is subject to a preferential tax rate. 
D) None of the above is false.

Question 16

Ms. Regga, a physician, earned $375,000 from her medical practice and $20,500 interest and qualified dividends from her investment portfolio. She was allocated a $67,000 loss from a passive activity. Compute Ms. Regga's AGI.

Accepted Answer

A) $328,500 
B) $375,000 
C) $395,500 
D) None of the above 
A) $328,500 
B) $375,000 
C) $395,500 
D) None of the above

Question 17

Mr. Gordon, a resident of Pennsylvania, paid $20,000 for a bond issued by Delaware. This year, he received $800 of interest on the bond. His marginal state tax rate is 7%, and under Pennsylvania law, interest on debt obligations issued by another state is taxable. Mr. Gordon can deduct state income tax on his federal return, and his marginal federal tax rate is 35%. Computer his after-tax rate of return on the bond.

Accepted Answer

A) 4% 
B) 3.82% 
C) 3.72% 
D) 2.42% 
A) 4% 
B) 3.82% 
C) 3.72% 
D) 2.42%

Question 18

Ms. Watts owns stock in two S corporations, MKP Corporation and Reynolds Inc. This year, Ms. Watts had the following income and loss items.   If Ms. Watts materially participates in the business of both corporations, compute her AGI.

Accepted Answer

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

Question 19

An inter vivos transfer is a gratuitous transfer of property by an individual that occurs at death.

Accepted Answer

A) True 
 B)False

Question 20

Ruth Darma is a shareholder who is not involved in the day-to-day activities of an S corporation. Her interest in the business is a passive activity.

Accepted Answer

A) True 
 B)False

Only accrual basis individuals are required to accrue original issue discount on a bond as annual interest income.

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.

Mr. Vernon owns stock in two S corporations, Able Corporation and Benson Inc. This year, Mr. Vernon had the following income and loss items. If Vernon materially participates in Able's business but not in Benson's business, compute his AGI.

Ms. Lopez paid $7,260 interest on a mortgage on undeveloped land that she holds as an investment. Ms. Lopez's AGI is $112,200, which includes $4,900 interest income from a certificate of deposit. Which of the following statements is true?

Mr. Forest, a single taxpayer, recognized a $252,000 loss on the sale of Section 1244 stock. What is the character of this loss?

Mr. and Mrs. Sturm actively manage an office building that they purchased in January 1997. This year, the office building generated a $68,000 net loss. The couple's income items consisted of $72,300 salary and $14,000 interest and dividend income. How much of the rental loss is deductible this year?

Investment interest expense is a miscellaneous itemized deduction subject to the 2% AGI limitation.

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

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.

Lindsey owns and actively manages an apartment complex. This year, the complex generated a $40,300 net loss. If Lindsey's AGI before considering this loss is $118,200 and she owns no other passive activities, how much of the loss is deductible this year?

Individual taxpayers are not allowed to deduct capital losses in excess of capital gains.

Unrecaptured Section 1250 gain is taxed at a maximum rate of 28%.

Mr. Quinn recognized a $900 net short-term capital gain and a $1,380 long-term capital gain this year. Which of the following statements is false?

Ms. Regga, a physician, earned $375,000 from her medical practice and $20,500 interest and qualified dividends from her investment portfolio. She was allocated a $67,000 loss from a passive activity. Compute Ms. Regga's AGI.

Ms. Watts owns stock in two S corporations, MKP Corporation and Reynolds Inc. This year, Ms. Watts had the following income and loss items. If Ms. Watts materially participates in the business of both corporations, compute her AGI.

An inter vivos transfer is a gratuitous transfer of property by an individual that occurs at death.

Ruth Darma is a shareholder who is not involved in the day-to-day activities of an S corporation. Her interest in the business is a passive activity.

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

Filters

Exam 16: Investment and Personal Financial Planning

Only accrual basis individuals are required to accrue original issue discount on a bond as annual interest income.

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.

Mr. Vernon owns stock in two S corporations, Able Corporation and Benson Inc. This year, Mr. Vernon had the following income and loss items. If Vernon materially participates in Able's business but not in Benson's business, compute his AGI.

Ms. Lopez paid $7,260 interest on a mortgage on undeveloped land that she holds as an investment. Ms. Lopez's AGI is $112,200, which includes $4,900 interest income from a certificate of deposit. Which of the following statements is true?

Mr. Forest, a single taxpayer, recognized a $252,000 loss on the sale of Section 1244 stock. What is the character of this loss?

Investment interest expense is a miscellaneous itemized deduction subject to the 2% AGI limitation.

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

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.

Lindsey owns and actively manages an apartment complex. This year, the complex generated a $40,300 net loss. If Lindsey's AGI before considering this loss is $118,200 and she owns no other passive activities, how much of the loss is deductible this year?

Individual taxpayers are not allowed to deduct capital losses in excess of capital gains.

Unrecaptured Section 1250 gain is taxed at a maximum rate of 28%.

Mr. Quinn recognized a $900 net short-term capital gain and a $1,380 long-term capital gain this year. Which of the following statements is false?

Ms. Regga, a physician, earned $375,000 from her medical practice and $20,500 interest and qualified dividends from her investment portfolio. She was allocated a $67,000 loss from a passive activity. Compute Ms. Regga's AGI.

Ms. Watts owns stock in two S corporations, MKP Corporation and Reynolds Inc. This year, Ms. Watts had the following income and loss items. If Ms. Watts materially participates in the business of both corporations, compute her AGI.

An inter vivos transfer is a gratuitous transfer of property by an individual that occurs at death.

Ruth Darma is a shareholder who is not involved in the day-to-day activities of an S corporation. Her interest in the business is a passive activity.

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

Filters