Question 1

The exclusion of gain on the sale of a personal residence may be elected only by a taxpayer who has owned three or more residences.

Accepted Answer

A) True 
 B)False

Question 2

The qualified business income deduction is a percentage of wages earned by an employee.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is true about capital gains?

Accepted Answer

A) Short-term capital gains are not netted with other capital gains and losses. 
B) For 2018, long-term capital gains are subject to special tax treatment. 
C) Long-term capital gains are never taxed. 
D) Net short-term capital gains are not netted with net long-term capital losses. 
E) None of the above. 
A) Short-term capital gains are not netted with other capital gains and losses. 
B) For 2018, long-term capital gains are subject to special tax treatment. 
C) Long-term capital gains are never taxed. 
D) Net short-term capital gains are not netted with net long-term capital losses. 
E) None of the above.

Question 4

Indicate whether a gain or loss realized in each of the following situations would be long-term or short-term by putting an "X" on the appropriate blank line: $\begin{array}{llcc}
\quad\quad\quad  \text {Date Acquired} &  \text {  Date Sold }&\text {Long-term}&\text { Short-term} \
 &\
\end{array}$ 
a. 
$\begin{array}{llcc}
\quad\quad\quad  \text { June 6,2013} &  \text {  January 20, 2018 }&& \
 &\
\end{array}$

b. 
$\begin{array}{llcc}
\quad\quad\quad  \text { April 18,2018 } &  \text { July 13,2018 }&& \ 
 &\
\end{array}$
c. 
$\begin{array}{llcc}
  \quad\quad\quad\text { May 9, 2018 } &  \text {May 14,2017  }&& \ 
 &\
\end{array}$

d.$\begin{array}{llcc}
 \quad\quad\quad \text {  July 12,2017 } &  \text { August 15,2018 }&& \ 
 &\
\end{array}$

e.$\begin{array}{llcc}
\quad\quad\quad  \text {   January 6,2017   } &  \text { June 20,2018 }&& \ 
 &\
\end{array}$

Accepted Answer

a.Long-term
b.Short-

Question 5

For purposes of determining the adjusted basis of a capital asset at the time of its sale,

Accepted Answer

A) Capital improvements are added to the basis. 
B) Ordinary repairs reduce the adjusted basis. 
C) Accumulated depreciation is added to the basis. 
D) The basis does not include costs such as title insurance and escrow fees related to the initial purchase. 
A) Capital improvements are added to the basis. 
B) Ordinary repairs reduce the adjusted basis. 
C) Accumulated depreciation is added to the basis. 
D) The basis does not include costs such as title insurance and escrow fees related to the initial purchase.

Question 6

Patrick has a business net operating loss of $70,000 in 2018.Patrick's business generated significant taxable profits in 2016 and in 2017.Which of the following is true?Patrick may elect to offset the income he generated in 2017 with 2018's net operating loss.The remaining net operating loss (if any)can be used to offset future taxable income.

Accepted Answer

A) Patrick may offset income he generated in 2016 and 2017 with 2018's net operating loss by carrying the net operating loss back to each of those tax years.The remaining net operating loss (if any) can be carried forward and used to offset future taxable income. 
B) Patrick may use the net operating loss to offset income from any year he chooses. 
C) Net operating losses can offset 80% of the income in future years. 
D) Patrick may elect to offset the income he generated in 2017 with 2018's net operating loss.The remaining net operating loss (if any) can be used to offset future taxable income. 
E) None of the above. 
A) Patrick may offset income he generated in 2016 and 2017 with 2018's net operating loss by carrying the net operating loss back to each of those tax years.The remaining net operating loss (if any) can be carried forward and used to offset future taxable income. 
B) Patrick may use the net operating loss to offset income from any year he chooses. 
C) Net operating losses can offset 80% of the income in future years. 
D) Patrick may elect to offset the income he generated in 2017 with 2018's net operating loss.The remaining net operating loss (if any) can be used to offset future taxable income. 
E) None of the above.

Question 7

In the current year, Estes has net short-term capital losses of $3,000, a net long-term capital loss of $45,000, and taxable income from wages of $35,000.
a.Calculate the amount of Estes' deduction for capital losses for the current year.
b.Calculate the amount and nature (short-term or long-term) of his capital loss carryforward.
c.For how many years may Estes carry the unused loss forward?

Accepted Answer

a.$3,000
b.$45,000 net long-te

Question 8

Which of the following statements is true?

Accepted Answer

A) A taxpayer's personal residence qualifies for a like-kind exchange. 
B) A taxpayer who sells a personal residence may always exclude the realized gain from taxable income. 
C) A one-time election is available to taxpayers 55 years of age or older which allows them to sell their personal residences and to exclude all of the realized gain. 
D) None of the above are true. 
E) All of the above are true. 
A) A taxpayer's personal residence qualifies for a like-kind exchange. 
B) A taxpayer who sells a personal residence may always exclude the realized gain from taxable income. 
C) A one-time election is available to taxpayers 55 years of age or older which allows them to sell their personal residences and to exclude all of the realized gain. 
D) None of the above are true. 
E) All of the above are true.

Question 9

Thelma works at a liquor store in 2018 and makes $44,000.She also has dividend income of $12,000 and interest income of $1,000.She owns a beach house that gives her $11,000 in net rental income and she owns a stake in a limited partnership that generates a $15,000 loss.What is her adjusted gross income in 2018?

Accepted Answer

A) $58,000 
B) $45,000 
C) $69,000 
D) $57,000 
E) $53,000 
A) $58,000 
B) $45,000 
C) $69,000 
D) $57,000 
E) $53,000

Question 10

The net operating loss (NOL)provisions of the Internal Revenue Code

Accepted Answer

A) Apply only to individuals with wages and itemized deductions. 
B) Require the use of a 2-year carryback in all cases. 
C) Are primarily designed to provide relief for trade or business losses. 
D) Allow the deduction for home mortgage interest to create an NOL. 
E) Would not be necessary if tax rates were progressive. 
A) Apply only to individuals with wages and itemized deductions. 
B) Require the use of a 2-year carryback in all cases. 
C) Are primarily designed to provide relief for trade or business losses. 
D) Allow the deduction for home mortgage interest to create an NOL. 
E) Would not be necessary if tax rates were progressive.

Question 11

Which of the following is not true about capital assets?

Accepted Answer

A) Real property used in a trade or business is not a capital asset. 
B) Capital losses may be carried back for 3 years to offset capital gains in those years. 
C) Net long-term capital gains are granted preferential tax treatment. 
D) Individual taxpayers may deduct net capital losses of up to $3,000 per year. 
E) Shares of stock held for investment are capital assets. 
A) Real property used in a trade or business is not a capital asset. 
B) Capital losses may be carried back for 3 years to offset capital gains in those years. 
C) Net long-term capital gains are granted preferential tax treatment. 
D) Individual taxpayers may deduct net capital losses of up to $3,000 per year. 
E) Shares of stock held for investment are capital assets.

Question 12

Christian, a single taxpayer, acquired a rental house in 2005.The rental house, which Christian actively manages, generated a $15,000 loss in 2018.In addition, Christian owns a limited partnership interest which he acquired in 2010.His share of the partnership loss for 2018 is $10,000.Christian has modified adjusted gross income, before the rental loss and partnership loss, of $134,000.What is the amount of these losses that Christian may deduct in 2018?

Accepted Answer

$8,000, lesser of $15,000 rent

Question 13

Which one of the following is a capital asset?

Accepted Answer

A) Accounts receivable 
B) Copyright held by the author 
C) Securities held for investment 
D) Inventories 
E) All of the above are capital assets 
A) Accounts receivable 
B) Copyright held by the author 
C) Securities held for investment 
D) Inventories 
E) All of the above are capital assets

Question 14

Ned has active modified adjusted gross income before passive losses of $160,000.He has a loss of $15,000 on rental property he actively manages.How much of the loss is he allowed to deduct against his other income?

Accepted Answer

A) None 
B) $10,000 
C) $15,000 
D) $5,000 
A) None 
B) $10,000 
C) $15,000 
D) $5,000

Question 15

Jess has had a couple of good years in his new business and generated large amounts of taxable income.In 2018, however, he has a net operating loss of $8,000.He is uncertain about the future of the business and has a serious cash flow problem.As his tax accountant, how would you recommend Jess treat his net operating loss?

Accepted Answer

Although it would be convenient to carry

Question 16

Carlos bought a building for $113,000 in 2014.He added an addition to the building for $26,000.In 2018, he sold it for $212,000.What was his long-term capital gain (ignore depreciation)?

Accepted Answer

A) $0 
B) $47,000 
C) $73,000 
D) $99,000 
E) $212,000 
A) $0 
B) $47,000 
C) $73,000 
D) $99,000 
E) $212,000

Question 17

On August 8, 2018, Sam, single, age 62, sold for $210,000 his principal residence, which he has lived in for 10 years, and which had an adjusted basis of $60,000.On November 1, 2018, he purchased a new residence for $80,000.For 2018, Sam should recognize a gain on the sale of his residence of:

Accepted Answer

A) $0 
B) $25,000 
C) $50,000 
D) $130,000 
E) None of the above 
A) $0 
B) $25,000 
C) $50,000 
D) $130,000 
E) None of the above

Question 18

There is no limit on the amount of capital losses that an individual may deduct against ordinary income.

Accepted Answer

A) True 
 B)False

Question 19

If a capital asset acquired August 5, 2017 is sold on February 6, 2018, any gain is a short-term capital gain.

Accepted Answer

A) True 
 B)False

Question 20

Martha has a net capital loss of $20,000 and other ordinary taxable income of $45,000 for the current tax year.What is the amount of Martha's taxable income after deducting the allowed capital loss?

Accepted Answer

A) $25,000 
B) $38,000 
C) $42,000 
D) $45,000 
E) None of the above 
A) $25,000 
B) $38,000 
C) $42,000 
D) $45,000 
E) None of the above

The exclusion of gain on the sale of a personal residence may be elected only by a taxpayer who has owned three or more residences.

The qualified business income deduction is a percentage of wages earned by an employee.

Which of the following is true about capital gains?

For purposes of determining the adjusted basis of a capital asset at the time of its sale,

Which of the following statements is true?

The net operating loss (NOL)provisions of the Internal Revenue Code

Which of the following is not true about capital assets?

Which one of the following is a capital asset?

Ned has active modified adjusted gross income before passive losses of $160,000.He has a loss of $15,000 on rental property he actively manages.How much of the loss is he allowed to deduct against his other income?

Carlos bought a building for $113,000 in 2014.He added an addition to the building for $26,000.In 2018, he sold it for $212,000.What was his long-term capital gain (ignore depreciation)?

On August 8, 2018, Sam, single, age 62, sold for $210,000 his principal residence, which he has lived in for 10 years, and which had an adjusted basis of $60,000.On November 1, 2018, he purchased a new residence for $80,000.For 2018, Sam should recognize a gain on the sale of his residence of:

There is no limit on the amount of capital losses that an individual may deduct against ordinary income.

If a capital asset acquired August 5, 2017 is sold on February 6, 2018, any gain is a short-term capital gain.

Martha has a net capital loss of $20,000 and other ordinary taxable income of $45,000 for the current tax year.What is the amount of Martha's taxable income after deducting the allowed capital loss?

The Individual Income Tax Return

Gross Income and Exclusions

Additional Income Part 1

Deductions and Adjustments to Income

Accounting Methods and Taxes

Tax Credits

Depreciation and Sale of Business Property

Payroll, Estimated Payments, and Retirement Plans

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters

Exam 4: Additional Income Part 2

The exclusion of gain on the sale of a personal residence may be elected only by a taxpayer who has owned three or more residences.

The qualified business income deduction is a percentage of wages earned by an employee.

Which of the following is true about capital gains?

For purposes of determining the adjusted basis of a capital asset at the time of its sale,

Which of the following statements is true?

The net operating loss (NOL)provisions of the Internal Revenue Code

Which of the following is not true about capital assets?

Which one of the following is a capital asset?

Ned has active modified adjusted gross income before passive losses of $160,000.He has a loss of $15,000 on rental property he actively manages.How much of the loss is he allowed to deduct against his other income?

Carlos bought a building for $113,000 in 2014.He added an addition to the building for $26,000.In 2018, he sold it for $212,000.What was his long-term capital gain (ignore depreciation)?

On August 8, 2018, Sam, single, age 62, sold for $210,000 his principal residence, which he has lived in for 10 years, and which had an adjusted basis of $60,000.On November 1, 2018, he purchased a new residence for $80,000.For 2018, Sam should recognize a gain on the sale of his residence of:

There is no limit on the amount of capital losses that an individual may deduct against ordinary income.

If a capital asset acquired August 5, 2017 is sold on February 6, 2018, any gain is a short-term capital gain.

Martha has a net capital loss of $20,000 and other ordinary taxable income of $45,000 for the current tax year.What is the amount of Martha's taxable income after deducting the allowed capital loss?

The Individual Income Tax Return

Gross Income and Exclusions

Additional Income Part 1

Deductions and Adjustments to Income

Accounting Methods and Taxes

Tax Credits

Depreciation and Sale of Business Property

Payroll, Estimated Payments, and Retirement Plans

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters