Question 1

Mr. Jain paid the following taxes this year.
   Compute Mr. Jain's itemized deduction for taxes.

Accepted Answer

$11,010 (state and local sales

Question 2

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 3

Jenna Leigh is employed as a receptionist for a CPA firm, but on evenings and weekends, she bakes wedding cakes. In each of the past four years, Jenna's baking activity resulted in a net profit. This year, the activity generated a $720 net loss. Which of the following statements is true?

Accepted Answer

A)  The legal presumption is that Jenna's $720 loss is a business loss. 
B)  The legal presumption is that Jenna's $720 loss is a nondeductible hobby loss. 
C)  Jenna must include the revenues from her baking activity in gross income but can't deduct any of her related expenses. 
D)  Jenna is allowed to report her $720 loss as a miscellaneous itemized deduction. 
A)  The legal presumption is that Jenna's $720 loss is a business loss. 
B)  The legal presumption is that Jenna's $720 loss is a nondeductible hobby loss. 
C)  Jenna must include the revenues from her baking activity in gross income but can't deduct any of her related expenses. 
D)  Jenna is allowed to report her $720 loss as a miscellaneous itemized deduction.

Question 4

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 these 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 these statements is true.

Question 5

Carl had $2,000 gambling winnings and $8,400 gambling losses this. Carl must include $2,000 in gross income and can deduct $8,400 as an itemized deduction.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following items is included in the recipient's gross income?

Accepted Answer

A)  Life insurance death benefit 
B)  Legal award for personal injury 
C)  Legal award for punitive damages 
D)  Scholarship for tuition, fees, and books 
A)  Life insurance death benefit 
B)  Legal award for personal injury 
C)  Legal award for punitive damages 
D)  Scholarship for tuition, fees, and books

Question 7

On February 1, 2015, Alan, a single individual, purchased his first personal residence for $400,000. On July 1, 2015, Alan sold this residence for $460,000 because he wanted to rent a newly constructed condominium. Consequently, Alan occupied the home for only 150 days. How much gain must Alan recognize?

Accepted Answer

A)  $0 
B)  $8,630 
C)  $51,370 
D)  $60,000 
A)  $0 
B)  $8,630 
C)  $51,370 
D)  $60,000

Question 8

Damage to a personal residence by a tornado is an example of a casualty loss.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements about divorce settlements is false?

Accepted Answer

A)  Alimony is excluded from the recipient's gross income. 
B)  Child support is excluded from the recipient's gross income. 
C)  Alimony is an above-the-line deduction for the payer. 
D)  None of the above is false. 
A)  Alimony is excluded from the recipient's gross income. 
B)  Child support is excluded from the recipient's gross income. 
C)  Alimony is an above-the-line deduction for the payer. 
D)  None of the above is false.

Question 10

Recipients of the Nobel Peace Prize must include the prize in gross income.

Accepted Answer

A) True 
 B)False

Question 11

Mr. and Mrs. Darwin sold their principal residence on September 12, 2014, and purchased and moved into a new residence three weeks later. They properly excluded their $353,000 gain realized on this sale from gross income. On October 2, 2015, the Darwins realized a gain on sale of the new residence. Which of the following statements about this gain is true?

Accepted Answer

A)  If the Darwins sold the new residence because of a change in place of Mr. Darwin's employment, they may exclude up to $500,000 of the gain from gross income. 
B)  The Darwins may not exclude any of the gain from gross income. 
C)  The Darwins may exclude $147,000 of the gain from gross income. 
D)  None of the above statements is true. 
A)  If the Darwins sold the new residence because of a change in place of Mr. Darwin's employment, they may exclude up to $500,000 of the gain from gross income. 
B)  The Darwins may not exclude any of the gain from gross income. 
C)  The Darwins may exclude $147,000 of the gain from gross income. 
D)  None of the above statements is true.

Question 12

Mia inherited $1 million from her deceased grandfather. Mia must include the inheritance in gross income.

Accepted Answer

A) True 
 B)False

Question 13

Lori owns a vacation home that she rents out for about three months each year. Her deduction for expenses allocable to the rental periods is limited to her gross rental income.

Accepted Answer

A) True 
 B)False

Mr. Jain paid the following taxes this year. Compute Mr. Jain's itemized deduction for taxes.

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

Jenna Leigh is employed as a receptionist for a CPA firm, but on evenings and weekends, she bakes wedding cakes. In each of the past four years, Jenna's baking activity resulted in a net profit. This year, the activity generated a $720 net loss. Which of the following statements is true?

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?

Carl had $2,000 gambling winnings and $8,400 gambling losses this. Carl must include $2,000 in gross income and can deduct $8,400 as an itemized deduction.

Which of the following items is included in the recipient's gross income?

Damage to a personal residence by a tornado is an example of a casualty loss.

Which of the following statements about divorce settlements is false?

Recipients of the Nobel Peace Prize must include the prize in gross income.

Mia inherited $1 million from her deceased grandfather. Mia must include the inheritance in gross income.

Lori owns a vacation home that she rents out for about three months each year. Her deduction for expenses allocable to the rental periods is limited to her gross rental income.

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

Filters

Exam 17: Tax Consequences of Personal Activities

Mr. Jain paid the following taxes this year. Compute Mr. Jain's itemized deduction for taxes.

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

Jenna Leigh is employed as a receptionist for a CPA firm, but on evenings and weekends, she bakes wedding cakes. In each of the past four years, Jenna's baking activity resulted in a net profit. This year, the activity generated a $720 net loss. Which of the following statements is true?

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?

Carl had $2,000 gambling winnings and $8,400 gambling losses this. Carl must include $2,000 in gross income and can deduct $8,400 as an itemized deduction.

Which of the following items is included in the recipient's gross income?

Damage to a personal residence by a tornado is an example of a casualty loss.

Which of the following statements about divorce settlements is false?

Recipients of the Nobel Peace Prize must include the prize in gross income.

Mia inherited $1 million from her deceased grandfather. Mia must include the inheritance in gross income.

Lori owns a vacation home that she rents out for about three months each year. Her deduction for expenses allocable to the rental periods is limited to her gross rental income.

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

Filters