Question 1

Maria, who is single, had the following items for 2012:
   Determine Maria's adjusted gross income for 2012.

Accepted Answer

The answer of Maria, who is single, had the following...

Question 2

In 2012, Mary had the following items:   Assuming that Mary files as head of household (has one dependent child), determine her taxable income for the current year.

Accepted Answer

A) $13,700. 
B) $14,100. 
C) $14,300. 
D) $24,300. 
E) None of the above. 
A) $13,700. 
B) $14,100. 
C) $14,300. 
D) $24,300. 
E) None of the above.

Question 3

Three years ago, Sharon loaned her sister $30,000 to buy a car.A note was issued for the loan with the provision for monthly payments of principal and interest.Last year, Sharon purchased a car from the same dealer, Hank's Auto.As partial payment for the car, the dealer accepted the note from Sharon's sister.At the time Sharon purchased the car, the note had a balance of $18,000.During the current year, Sharon's sister died.Hank's Auto was notified that no further payments on the note would be received.At the time of the notification, the note had a balance due of $15,500.What is the amount of loss, with respect to the note, that Hank's Auto may claim on the current year tax return?

Accepted Answer

A) $0. 
B) $3,000. 
C) $15,500. 
D) $18,000. 
E) None of the above. 
A) $0. 
B) $3,000. 
C) $15,500. 
D) $18,000. 
E) None of the above.

Question 4

Mike, single, age 31, had the following items for 2012:
   Compute Mike's taxable income for 2012.

Accepted Answer

The answer of Mike, single, age 31, had the following...

Question 5

Peggy is in the business of factoring accounts receivable.Last year, she purchased a $30,000 account receivable for $25,000.This year, the account was settled for $25,000.How much loss can Peggy deduct and in which year?

Accepted Answer

A) $5,000 for the current year. 
B) $5,000 for the prior year and $5,000 for the current year. 
C) $5,000 for the prior year. 
D) $10,000 for the current year. 
E) None of the above. 
A) $5,000 for the current year. 
B) $5,000 for the prior year and $5,000 for the current year. 
C) $5,000 for the prior year. 
D) $10,000 for the current year. 
E) None of the above.

Question 6

A cash basis taxpayer can deduct the cost of a product sold even though the purchaser of the product ultimately does not pay the purchase price.

Accepted Answer

A) True 
 B)False

Question 7

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 a cash 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 8

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

Accepted Answer

A) True 
 B)False

Question 9

In 2012, Morley, a single taxpayer, had an AGI of $30,000 before considering the following items:   Determine the amount of Morley's itemized deduction from the losses.

Accepted Answer

A) $0. 
B) $2,900. 
C) $5,120. 
D) $5,600. 
E) None of the above. 
A) $0. 
B) $2,900. 
C) $5,120. 
D) $5,600. 
E) None of the above.

Question 10

Cream, Inc.'s taxable income for 2012 before any deduction for an NOL carryforward of $30,000 is $70,000.Cream's qualified production activities income (QPAI) is $60,000.What is the amount of Cream's domestic production activities deduction (DPAD) for 2012?

Accepted Answer

A) $1,200. 
B) $1,800. 
C) $2,400. 
D) $3,600. 
E) None of the above. 
A) $1,200. 
B) $1,800. 
C) $2,400. 
D) $3,600. 
E) None of the above.

Question 11

John files a return as a single taxpayer.In 2012, he had the following items:   Determine John's AGI for 2012.

Accepted Answer

A) ($5,000). 
B) $0. 
C) $45,000. 
D) $51,000. 
E) None of the above. 
A) ($5,000). 
B) $0. 
C) $45,000. 
D) $51,000. 
E) None of the above.

Question 12

The cost of repairs to damaged property is not an acceptable measure of the loss in value of the property.

Accepted Answer

A) True 
 B)False

Question 13

Last year, Amos had AGI of $50,000. Amos also had a diamond ring stolen which cost $20,000 and was worth $17,000 at the time of the theft. He itemized deductions on last year's tax return. In the current year, Amos recovered $17,000 from the insurance company. Therefore, he must include $11,900 in gross income on the tax return for the current year.

Accepted Answer

A) True 
 B)False

Question 14

Discuss the effect of alimony in computing a net operating loss.

Accepted Answer

limony received is treated as

Question 15

Regarding research and experimental expenditures, which of the following are not qualified expenditures?

Accepted Answer

A) Costs of improving an existing pilot model. 
B) Costs to develop a plant process. 
C) Costs of developing a formula. 
D) Depreciation on a building used for research. 
E) All of the above are qualified expenditures. 
A) Costs of improving an existing pilot model. 
B) Costs to develop a plant process. 
C) Costs of developing a formula. 
D) Depreciation on a building used for research. 
E) All of the above are qualified expenditures.

Question 16

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 17

If an account receivable written off during the current year is subsequently collected during the current year, the write-off entry is reversed.

Accepted Answer

A) True 
 B)False

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

Maria, who is single, had the following items for 2012: Determine Maria's adjusted gross income for 2012.

In 2012, Mary had the following items: Assuming that Mary files as head of household (has one dependent child), determine her taxable income for the current year.

Mike, single, age 31, had the following items for 2012: Compute Mike's taxable income for 2012.

Peggy is in the business of factoring accounts receivable.Last year, she purchased a $30,000 account receivable for $25,000.This year, the account was settled for $25,000.How much loss can Peggy deduct and in which year?

A cash basis taxpayer can deduct the cost of a product sold even though the purchaser of the product ultimately does not pay the purchase price.

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

In 2012, Morley, a single taxpayer, had an AGI of $30,000 before considering the following items: Determine the amount of Morley's itemized deduction from the losses.

Cream, Inc.'s taxable income for 2012 before any deduction for an NOL carryforward of $30,000 is $70,000.Cream's qualified production activities income (QPAI) is $60,000.What is the amount of Cream's domestic production activities deduction (DPAD) for 2012?

John files a return as a single taxpayer.In 2012, he had the following items: Determine John's AGI for 2012.

The cost of repairs to damaged property is not an acceptable measure of the loss in value of the property.

Discuss the effect of alimony in computing a net operating loss.

Regarding research and experimental expenditures, which of the following are not qualified expenditures?

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 an account receivable written off during the current year is subsequently collected during the current year, the write-off entry is reversed.

An Introduction to Taxation and Understanding the Federal 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 Nontaxable Exchanges-Part 1

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 2

Property Transactions: Capital Gains and Losses, 1231, 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

Income Taxation of Trusts and Estates

Filters