Question 1

Which of the following is not a test which must be met to qualify for the moving expense deduction?

Accepted Answer

A) The taxpayer must stay with the same employer. 
B) The taxpayer must change job sites. 
C) The taxpayer must remain at the new job location for 39 weeks during the 12 months following the move (78 weeks out of 24 months if self-employed). 
D) The distance from the taxpayer's former residence to the new job must be at least 50 miles more than the former residence to the former job. 
E) All of the above are tests for the moving expense deduction. 
A) The taxpayer must stay with the same employer. 
B) The taxpayer must change job sites. 
C) The taxpayer must remain at the new job location for 39 weeks during the 12 months following the move (78 weeks out of 24 months if self-employed). 
D) The distance from the taxpayer's former residence to the new job must be at least 50 miles more than the former residence to the former job. 
E) All of the above are tests for the moving expense deduction.

Question 2

Johnice's employer contributes $3,000 to a qualified retirement plan in 2014 for Johnice's retirement.
a.Is the $3,000 deductible by Johnice's employer in 2014? Explain.
b.Is the $3,000 income to Johnice in 2014? Explain.
c.Is either the interest or dividend earnings on the $3,000 contribution taxable to Johnice in 2014? Explain.

Accepted Answer

The answer of Johnice's employer contributes $3,000 to a qualified...

Question 3

Warren invested in a limited partnership tax shelter in 2001. During 2014, his losses from the partnership amount to $100,000. If Warren has no passive income, what is the amount of Warren's deduction for passive losses for 2014?

Accepted Answer

A) $0 
B) $10,000 
C) $20,000 
D) $40,000 
E) None of the above 
A) $0 
B) $10,000 
C) $20,000 
D) $40,000 
E) None of the above

Question 4

If a taxpayer receives an early distribution from an IRA due to disability, he or she will not be subject to a penalty.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following statements is correct?

Accepted Answer

A) Contributions to Keogh plans by self-employed taxpayers are generally limited to the lesser of 15 percent of their net earned income (before the Keogh deduction) or $45,000. 
B) The contribution limits for SEPs (Simplified Employee Pension) are the lesser of 20 percent of net self-employment income or $52,000 for a self-employed taxpayer. 
C) Employees may elect to make annual contributions to 401(k) plans up to the lesser of 15 percent of their net earned income (before the 401(k) deduction) or $45,000. 
D) The contribution limits for SEPs are a maximum of $17,500 ($23,000 for taxpayers 50 or older). 
A) Contributions to Keogh plans by self-employed taxpayers are generally limited to the lesser of 15 percent of their net earned income (before the Keogh deduction) or $45,000. 
B) The contribution limits for SEPs (Simplified Employee Pension) are the lesser of 20 percent of net self-employment income or $52,000 for a self-employed taxpayer. 
C) Employees may elect to make annual contributions to 401(k) plans up to the lesser of 15 percent of their net earned income (before the 401(k) deduction) or $45,000. 
D) The contribution limits for SEPs are a maximum of $17,500 ($23,000 for taxpayers 50 or older).

Question 6

Donald, a 40-year-old married taxpayer, has a salary of $55,000 and interest income of $6,000. What is the maximum amount Donald can contribute to a Roth IRA?

Accepted Answer

A) $550 
B) $610 
C) $1,220 
D) $3,000 
E) $5,500 
A) $550 
B) $610 
C) $1,220 
D) $3,000 
E) $5,500

Question 7

Contributions by a self-employed individual to a Keogh plan for 2014 are limited to the lesser of 20 percent of net earned income or:

Accepted Answer

A) $43,000 
B) $50,000 
C) $51,000 
D) $52,000 
E) None of the above 
A) $43,000 
B) $50,000 
C) $51,000 
D) $52,000 
E) None of the above

Question 8

If an employer makes a contribution to a qualified retirement plan on behalf of an employee, the amount is currently deductible by the employer, and the employee must include the amount in gross income at the time the contribution is made.

Accepted Answer

A) True 
 B)False

Question 9

Ben is a 19-year-old single software inventor earning $200,000 a year and is not covered by a pension plan at work. How much can he put into a Roth IRA in 2014?

Accepted Answer

$0. He is over the i

Question 10

Steven is 27 years old and has a total AGI of $110,000 in 2014. In 2014, he gets pneumonia and has a medical bill that totals $7,500. He withdraws $7,500 from his traditional IRA to pay for the bill. Which of the following is true?

Accepted Answer

A) He is not subject to penalties on the IRA withdrawal because it was for medical expenses. 
B) He is not subject to penalties on the IRA withdrawal because he was disabled by pneumonia for 2 weeks. 
C) He is subject to penalties on the IRA withdrawal because a person may not take a withdrawal from a traditional IRA until they are 59 ½ years old no matter what. 
D) He is subject to penalties on the IRA withdrawal because the medical bill was not greater than 10 percent of his AGI. 
E) None of the above is correct. 
A) He is not subject to penalties on the IRA withdrawal because it was for medical expenses. 
B) He is not subject to penalties on the IRA withdrawal because he was disabled by pneumonia for 2 weeks. 
C) He is subject to penalties on the IRA withdrawal because a person may not take a withdrawal from a traditional IRA until they are 59 ½ years old no matter what. 
D) He is subject to penalties on the IRA withdrawal because the medical bill was not greater than 10 percent of his AGI. 
E) None of the above is correct.

Question 11

For the current year, Robert, a single taxpayer, earned wages of $235,000 from Big Shot Corporation. He also received interest income of $1,000 from Little Credit Union. Robert had a $9,000 loss from his rental property which he actively manages. $2,000 of income was also reported on his Schedule K-1 from ABC Limited Partnership. Neither the rental property nor the partnership investment has passive losses carried over from prior years. Since Robert is not an active participant in a retirement plan, he decides to contribute $5,500 to his IRA.
a. Calculate Robert's adjusted gross income using the above information.
b. How much is Robert's unallowed loss from his passive investments?
c. What happens to the unallowed passive loss?
d. Calculate Robert's adjusted gross income assuming his wages were only $35,000.

Accepted Answer

a. $230,500, calculated as $235,000 + $1

Question 12

Carey, a single taxpayer, purchased a rental house in 2014, which he actively manages. During 2014, Carey had a loss of $14,000 from the rental house. If Carey's adjusted gross income for 2014 is $144,000 before the rental loss, what is the amount of Carey's allowable deduction for the rental activity for 2014?

Accepted Answer

A) $0 
B) $3,000 
C) $6,000 
D) $14,000 
E) None of the above 
A) $0 
B) $3,000 
C) $6,000 
D) $14,000 
E) None of the above

Question 13

Rob and Julie, both in their 30s, file a joint income tax return for 2014. Rob's wages are $25,000 and Julie's wages are $33,000 for the year. Their total adjusted gross income is $58,000, and Julie is covered by a qualified pension plan at work but Rob is not.
a.What is the maximum amount that Rob and Julie may each contribute to their Roth IRAs?
b.​​​If Julie's wages are $110,000 for 2014, instead of $33,000, and their adjusted gross income is $135,000, (1) what is the maximum amount that Rob and Julie may each deduct for contributions to their individual retirement accounts, and (2) what is the maximum amount they could each contribute to Roth IRAs instead?

Accepted Answer

The answer of Rob and Julie, both in their 30s,...

Question 14

If a residence is rented for 15 days or more and is used for personal purposes for not more than 14 days or 10 percent of the days rented, whichever is greater, no allocation of expenses is required and the taxpayer may claim a deduction for the full amount of the expenses.

Accepted Answer

A) True 
 B)False

Question 15

Under a defined contribution plan, the contribution made on behalf of the employee is determined using a formula dependent on the employee's current compensation.

Accepted Answer

A) True 
 B)False

Question 16

Barrett is a 45-year-old political commentator who has self-employed net earned income of $170,000 in 2014. What is the maximum amount he can contribute to his simplified employee pension (SEP) for the year?

Accepted Answer

$34,000. His contrib

Question 17

Nancy has active modified adjusted gross income before passive losses of $125,000. She has a loss of $10,000 on a rental property she actively manages. How much of the loss is she allowed to deduct against the $125,000 of other income?

Accepted Answer

A) None 
B) $2,500 
C) $5,000 
D) $10,000 
A) None 
B) $2,500 
C) $5,000 
D) $10,000

Question 18

Walt and Jackie rent out their residence in San Diego to friends for 10 days while they vacation in Europe. They collect $1,000 of rental income. How is the rental income treated on their tax return? Explain.

Accepted Answer

Since the residence was rented

Question 19

Mort is the owner of an apartment building containing ten identical apartments. Mort resides in one apartment and rents out the remaining units. For 2014, the following information is available: What amount should Mort report as net rental income for 2014?

Accepted Answer

A) $12,750 
B) $13,350 
C) $13,500 
D) $13,635 
E) None of the above 
A) $12,750 
B) $13,350 
C) $13,500 
D) $13,635 
E) None of the above

Question 20

In some cases, a taxpayer may deduct an otherwise allowable contribution to an IRA, even though the contribution is made after the close of the tax year.

Accepted Answer

A) True 
 B)False

Which of the following is not a test which must be met to qualify for the moving expense deduction?

Warren invested in a limited partnership tax shelter in 2001. During 2014, his losses from the partnership amount to $100,000. If Warren has no passive income, what is the amount of Warren's deduction for passive losses for 2014?

If a taxpayer receives an early distribution from an IRA due to disability, he or she will not be subject to a penalty.

Which of the following statements is correct?

Donald, a 40-year-old married taxpayer, has a salary of $55,000 and interest income of $6,000. What is the maximum amount Donald can contribute to a Roth IRA?

Contributions by a self-employed individual to a Keogh plan for 2014 are limited to the lesser of 20 percent of net earned income or:

If an employer makes a contribution to a qualified retirement plan on behalf of an employee, the amount is currently deductible by the employer, and the employee must include the amount in gross income at the time the contribution is made.

Ben is a 19-year-old single software inventor earning $200,000 a year and is not covered by a pension plan at work. How much can he put into a Roth IRA in 2014?

Steven is 27 years old and has a total AGI of $110,000 in 2014. In 2014, he gets pneumonia and has a medical bill that totals $7,500. He withdraws $7,500 from his traditional IRA to pay for the bill. Which of the following is true?

If a residence is rented for 15 days or more and is used for personal purposes for not more than 14 days or 10 percent of the days rented, whichever is greater, no allocation of expenses is required and the taxpayer may claim a deduction for the full amount of the expenses.

Under a defined contribution plan, the contribution made on behalf of the employee is determined using a formula dependent on the employee's current compensation.

Barrett is a 45-year-old political commentator who has self-employed net earned income of $170,000 in 2014. What is the maximum amount he can contribute to his simplified employee pension (SEP) for the year?

Nancy has active modified adjusted gross income before passive losses of $125,000. She has a loss of $10,000 on a rental property she actively manages. How much of the loss is she allowed to deduct against the $125,000 of other income?

Walt and Jackie rent out their residence in San Diego to friends for 10 days while they vacation in Europe. They collect $1,000 of rental income. How is the rental income treated on their tax return? Explain.

Mort is the owner of an apartment building containing ten identical apartments. Mort resides in one apartment and rents out the remaining units. For 2014, the following information is available: What amount should Mort report as net rental income for 2014?

In some cases, a taxpayer may deduct an otherwise allowable contribution to an IRA, even though the contribution is made after the close of the tax year.

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses, Part I

Itemized Deductions and Other Incentives

Credits and Special Taxes

Accounting Periods and Methods and Depreciation

Capital Gains and Losses

Withholding, Estimated Payments, and Payroll Taxes

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters

Exam 4: Business Income and Expenses, Part II

Which of the following is not a test which must be met to qualify for the moving expense deduction?

Warren invested in a limited partnership tax shelter in 2001. During 2014, his losses from the partnership amount to $100,000. If Warren has no passive income, what is the amount of Warren's deduction for passive losses for 2014?

If a taxpayer receives an early distribution from an IRA due to disability, he or she will not be subject to a penalty.

Which of the following statements is correct?

Donald, a 40-year-old married taxpayer, has a salary of $55,000 and interest income of $6,000. What is the maximum amount Donald can contribute to a Roth IRA?

Contributions by a self-employed individual to a Keogh plan for 2014 are limited to the lesser of 20 percent of net earned income or:

If an employer makes a contribution to a qualified retirement plan on behalf of an employee, the amount is currently deductible by the employer, and the employee must include the amount in gross income at the time the contribution is made.

Ben is a 19-year-old single software inventor earning $200,000 a year and is not covered by a pension plan at work. How much can he put into a Roth IRA in 2014?

Steven is 27 years old and has a total AGI of $110,000 in 2014. In 2014, he gets pneumonia and has a medical bill that totals $7,500. He withdraws $7,500 from his traditional IRA to pay for the bill. Which of the following is true?

If a residence is rented for 15 days or more and is used for personal purposes for not more than 14 days or 10 percent of the days rented, whichever is greater, no allocation of expenses is required and the taxpayer may claim a deduction for the full amount of the expenses.

Under a defined contribution plan, the contribution made on behalf of the employee is determined using a formula dependent on the employee's current compensation.

Barrett is a 45-year-old political commentator who has self-employed net earned income of $170,000 in 2014. What is the maximum amount he can contribute to his simplified employee pension (SEP) for the year?

Nancy has active modified adjusted gross income before passive losses of $125,000. She has a loss of $10,000 on a rental property she actively manages. How much of the loss is she allowed to deduct against the $125,000 of other income?

Walt and Jackie rent out their residence in San Diego to friends for 10 days while they vacation in Europe. They collect $1,000 of rental income. How is the rental income treated on their tax return? Explain.

Mort is the owner of an apartment building containing ten identical apartments. Mort resides in one apartment and rents out the remaining units. For 2014, the following information is available: What amount should Mort report as net rental income for 2014?

In some cases, a taxpayer may deduct an otherwise allowable contribution to an IRA, even though the contribution is made after the close of the tax year.

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses, Part I

Itemized Deductions and Other Incentives

Credits and Special Taxes

Accounting Periods and Methods and Depreciation

Capital Gains and Losses

Withholding, Estimated Payments, and Payroll Taxes

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters