Question 1

Research and experimental expenditures do not include the cost of consumer surveys.

Accepted Answer

A) True 
 B)False

Question 2

In 2015,Mary had the following items: Salary $30,000 Personal use casualty gain 10,000 Personal use casualty loss (after $100 floor) 17,000 Other itemized deductions 4,000 ​ Assuming that Mary files as head of household (has one dependent child),determine her taxable income for 2015.

Accepted Answer

A) $12,750 
B) $13,000 
C) $14,000 
D) $22,000 
E) None of the above 
A) $12,750 
B) $13,000 
C) $14,000 
D) $22,000 
E) None of the above

Question 3

Five years ago,Tom loaned his son John $20,000 to start a business.A note was executed with an interest rate of 8%,which is the Federal rate.The note required monthly payments of the interest with the $20,000 due at the end of ten years.John always made the interest payments until last year.During the current year,John notified his father that he was bankrupt and would not be able to repay the $20,000 or the accrued interest of $1,800.Tom is an accrual basis taxpayer whose only income is salary and interest income.The proper treatment for the nonpayment of the note is:

Accepted Answer

A) No deduction. 
B) $3,000 deduction. 
C) $20,000 deduction. 
D) $21,800 deduction. 
E) None of the above. 
A) No deduction. 
B) $3,000 deduction. 
C) $20,000 deduction. 
D) $21,800 deduction. 
E) None of the above.

Question 4

In the current year,Juan's home was burglarized.Juan had the following items stolen: ∙ Securities worth $25,000.Juan purchased the securities four years ago for $20,000. ∙ New tools which Juan had purchased two weeks earlier for $8,000.Juan uses the tools in making repairs at an apartment house that he owns and manages. ∙ An antique worth $15,000.Juan inherited the antique (a family keepsake) when the property was worth $11,000. ​ Juan's homeowner's policy had a $50,000 deductible clause for thefts.If Juan's salary for the year is $50,000,determine the amount of his itemized deductions as a result of the theft.

Accepted Answer

A) $3,100 
B) $6,000 
C) $26,100 
D) $26,500 
E) None of the above 
A) $3,100 
B) $6,000 
C) $26,100 
D) $26,500 
E) None of the above

Question 5

Ivory,Inc. ,has taxable income of $600,000 and qualified production activities income (QPAI) of $700,000 in the current year.Ivory's domestic production activities deduction is:

Accepted Answer

A) $36,000. 
B) $42,000. 
C) $54,000. 
D) $63,000. 
E) None of the above. 
A) $36,000. 
B) $42,000. 
C) $54,000. 
D) $63,000. 
E) None of the above.

Question 6

If a business debt previously deducted as partially worthless becomes totally worthless this year,only the amount not previously deducted can be deducted this year.

Accepted Answer

A) True 
 B)False

Question 7

If a taxpayer sells their § 1244 stock at a loss,all of the loss will be ordinary loss.

Accepted Answer

A) True 
 B)False

Question 8

If personal casualty gains exceed personal casualty losses (after deducting the $100 floor),there is no itemized deduction.

Accepted Answer

A) True 
 B)False

Question 9

A taxpayer who sustains a casualty loss in an area designated by the President of the United States as a disaster area may take the loss in the year in which the loss occurred or elect to take the loss in the previous year.Identify factors that should be considered in deciding in which year to take the loss.

Accepted Answer

Factors that should be considered includ

Question 10

Last year,Green Corporation incurred the following expenditures in the development of a new plant process: Salaries $250,000 Materials 90,000 Utilities 20,000 Quality control testing costs 40,000 Management study costs 5,000 Depreciation of equipment 18,000 ​ During the current year,benefits from the project began being realized in May.If Green Corporation elects a 60 month deferral and amortization period,determine the amount of the deduction for the current year.

Accepted Answer

A) $48,000 
B) $50,400 
C) $54,667 
D) $57,067 
E) None of the above 
A) $48,000 
B) $50,400 
C) $54,667 
D) $57,067 
E) None of the above

Question 11

Last year,Lucy purchased a $100,000 account receivable for $90,000.During the current year,Lucy collected $97,000 on the account.What are the tax consequences to Lucy associated with the collection of the account receivable? No subsequent collections are expected.

Accepted Answer

A) $0 
B) $2,000 gain 
C) $3,000 loss 
D) $13,000 loss 
E) None of the above 
A) $0 
B) $2,000 gain 
C) $3,000 loss 
D) $13,000 loss 
E) None of the above

Question 12

The domestic production activities deduction (DPAD) for a sole proprietor is calculated by multiplying a percentage rate (currently 9%) times adjusted gross income.

Accepted Answer

A) True 
 B)False

Question 13

A business bad debt is a debt unrelated to the taxpayer's trade or business either when it was created or when it became worthless.

Accepted Answer

A) True 
 B)False

Question 14

A bona fide debt cannot arise on a loan between father and son.

Accepted Answer

A) True 
 B)False

Question 15

Red Company is a proprietorship owned by Sally,a single individual.Red manufactures and sells widgets.An examination of Red's records shows the following items for the current year: Domestic production gross receipts $2,500,000 Cost of goods sold for domestic products 600,000 Expenses directly related to domestic production gross receipts (other than wages) ​ 280,000 Ratable portion of other expenses 100,000 Other expenses not allocated to domestic production gross receipts 30,000 W-2 wages paid to employees engaged in qualified domestic production activities ​ 270,000 Total W-2 wages 320,000 Sally also had the following additional items: Dividends received $ 20,000 Interest income 10,000 ​ Determine Sally's domestic production activities deduction for the current year.

Accepted Answer

Gross receipts
 $2,500,000
 Less: Cost o

Question 16

The cost of depreciable property is not a research and experimental expenditure.

Accepted Answer

A) True 
 B)False

Question 17

Juanita,single and age 43,had the following items for 2015: Salary $60,000 Interest income 6,000 Casualty loss on business property (15,000) Casualty loss on rental property (5,000) Loss on theft of securities (8,000) Personal casualty gains 9,000 Personal casualty loss (after $100 floor) (13,000) Other itemized deductions (9,000) ​ Compute Juanita's taxable income for 2015.

Accepted Answer

Salary
 $60,000
 Interest income
 6,000

Question 18

A nonbusiness bad debt deduction can be taken any year after the debt becomes totally worthless.

Accepted Answer

A) True 
 B)False

Question 19

Jose,single,had the following items for 2015: Salary $44,000 § 1244 loss on stock acquired 3 years ago (70,000) § 1244 gain on stock acquired 10 months ago 26,000 Worthless security purchased in June of last year (4,000) Nonbusiness bad debt (7,000) Interest income 8,000 Compute Jose's adjusted gross income for 2015. ​

Accepted Answer

Salary
 $44,000
 Ordinary loss from § 12

Question 20

Tonya had the following items for last year: Salary $40,000 Short-term capital gain 12,000 Nonbusiness bad debt (25,000) Long-term capital gain 8,000 ​ For the current year,Tonya had the following items: Salary $45,000 Collection of last year's bad debt 25,000 ​ Determine Tonya's adjusted gross income for the current year.

Accepted Answer

Salary
 $45,000
 Income under tax benefi

Research and experimental expenditures do not include the cost of consumer surveys.

In 2015,Mary had the following items: Salary $30,000 Personal use casualty gain 10,000 Personal use casualty loss (after $100 floor) 17,000 Other itemized deductions 4,000 Assuming that Mary files as head of household (has one dependent child),determine her taxable income for 2015.

Ivory,Inc. ,has taxable income of $600,000 and qualified production activities income (QPAI) of $700,000 in the current year.Ivory's domestic production activities deduction is:

If a business debt previously deducted as partially worthless becomes totally worthless this year,only the amount not previously deducted can be deducted this year.

If a taxpayer sells their § 1244 stock at a loss,all of the loss will be ordinary loss.

If personal casualty gains exceed personal casualty losses (after deducting the $100 floor),there is no itemized deduction.

Last year,Lucy purchased a $100,000 account receivable for $90,000.During the current year,Lucy collected $97,000 on the account.What are the tax consequences to Lucy associated with the collection of the account receivable? No subsequent collections are expected.

The domestic production activities deduction (DPAD) for a sole proprietor is calculated by multiplying a percentage rate (currently 9%) times adjusted gross income.

A business bad debt is a debt unrelated to the taxpayer's trade or business either when it was created or when it became worthless.

A bona fide debt cannot arise on a loan between father and son.

The cost of depreciable property is not a research and experimental expenditure.

A nonbusiness bad debt deduction can be taken any year after the debt becomes totally worthless.

An Introduction to Taxation and Understanding the Tax Law

Working With the Tax Law

Computing the Tax

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Depreciation, cost Recovery, amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Tax Credits and Payments

Property Transactions: Determination of Gain or Loss, basis Considerations, and Nontaxabl

Property Transactions: Capital Gains and Losses, section 1231 and Recapture Provisions

Alternative Minimum Tax

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

S Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

Family Tax Planning

Income Taxation of Trusts and Estates

Filters

Exam 7: Deductions and Losses: Certain Business Expenses and Losses

Research and experimental expenditures do not include the cost of consumer surveys.

In 2015,Mary had the following items: Salary $30,000 Personal use casualty gain 10,000 Personal use casualty loss (after $100 floor) 17,000 Other itemized deductions 4,000 ​ Assuming that Mary files as head of household (has one dependent child),determine her taxable income for 2015.

Ivory,Inc. ,has taxable income of $600,000 and qualified production activities income (QPAI) of $700,000 in the current year.Ivory's domestic production activities deduction is:

If a business debt previously deducted as partially worthless becomes totally worthless this year,only the amount not previously deducted can be deducted this year.

If a taxpayer sells their § 1244 stock at a loss,all of the loss will be ordinary loss.

If personal casualty gains exceed personal casualty losses (after deducting the $100 floor),there is no itemized deduction.

Last year,Lucy purchased a $100,000 account receivable for $90,000.During the current year,Lucy collected $97,000 on the account.What are the tax consequences to Lucy associated with the collection of the account receivable? No subsequent collections are expected.

The domestic production activities deduction (DPAD) for a sole proprietor is calculated by multiplying a percentage rate (currently 9%) times adjusted gross income.

A business bad debt is a debt unrelated to the taxpayer's trade or business either when it was created or when it became worthless.

A bona fide debt cannot arise on a loan between father and son.

The cost of depreciable property is not a research and experimental expenditure.

A nonbusiness bad debt deduction can be taken any year after the debt becomes totally worthless.

An Introduction to Taxation and Understanding the Tax Law

Working With the Tax Law

Computing the Tax

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Depreciation, cost Recovery, amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Tax Credits and Payments

Property Transactions: Determination of Gain or Loss, basis Considerations, and Nontaxabl

Property Transactions: Capital Gains and Losses, section 1231 and Recapture Provisions

Alternative Minimum Tax

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

S Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

Family Tax Planning

Income Taxation of Trusts and Estates

Filters

In 2015,Mary had the following items: Salary $30,000 Personal use casualty gain 10,000 Personal use casualty loss (after $100 floor) 17,000 Other itemized deductions 4,000 Assuming that Mary files as head of household (has one dependent child),determine her taxable income for 2015.