1) Jones Company, a calendar year, cash method taxpayer, paid $950 to purchase twelve months' worth of office supplies on December 12. Jones can deduct $950 in the year of payment.

Group of answer choices

true

false

2) Carlisle Inc., a calendar year taxpayer, generated a $296,400 net operating loss this year (2020). Carlisle may not carry the loss back for tax purposes.

Group of answer choices

true

false

3)

On November 30, 2020, Terra Services, a calendar year taxpayer, billed a client $8,450 for services rendered during 2020. Terra received a check in full payment from the client on January 12, 2021. If Terra is a cash method taxpayer, it reports $8,450 taxable income in 2020.

Group of answer choices

true

false

4)

Uni Inc. purchased an asset costing $67,500 by paying $13,500 cash at the date of purchase and giving the seller a 5-year interest-bearing note for the $54,000 balance. Uni's tax basis in the asset is $13,500.

Group of answer choices

true

false

5) Ness Inc. owns a $1 million insurance policy on the life of Cara Ness, the corporate CEO. The corporation is the policy beneficiary. Ness's annual premium on the policy is $3,160. Which of the following statements is true?

Group of answer choices

a)Ness Inc. can deduct the annual premium as a business expense. If Ness ever collects the $1 million death benefit, the benefit is excluded from gross income.

b)Ness Inc. can deduct the annual premium as a business expense. If Ness ever collects the $1 million death benefit, the benefit is included in gross income.

c)Ness Inc. can't deduct the annual premium as a business expense. If Ness ever collects the $1 million death benefit, the benefit is included in gross income.

d)Ness Inc. can't deduct the annual premium as a business expense. If Ness ever collects the $1 million death benefit, the benefit is excluded from gross income.

6)Supplies, Inc., leased equipment to a new individual customer on December 15, X1. The lease terms were $600 per month for a period of 36 months beginning January 1, X2. Customer was required to pay the first and last months rent at the time the lease was signed. Customer was also required to pay a $1,500 damage deposit. Supplies, Inc. must recognize as income for the lease:

Group of answer choices

a)$0 in X1, if Supplies, Inc. is a cash method taxpayer.

b)$1,200 in X1, if Supplies, Inc. is a cash method taxpayer.

c)$1,500 in X1, if Supplies, Inc. is a cash method taxpayer.

d)$2,700 in X1, if Supplies, Inc. is a cash method taxpayer.

e)None of these.

7) For purposes of determining gross income, which of the following is true?

Group of answer choices

a)A mechanic completed repairs on an automobile during the year and collects money from the customer. The customer was not satisfied with the repairs and sued the mechanic for a refund. The mechanic can defer recognition of the income until the suit has been settled.

b)A taxpayer who finds a wallet full of money is required to recognize income even though someone may eventually ask for the return of the money.

c)Embezzlement proceeds are not included in the embezzlers gross income because the embezzler has an obligation to repay the owner.

d)All of these are false.

e)All of these are true.

8) The basis of personal use property converted to business use is:

Group of answer choices

Always the lower of its adjusted basis or fair market value on the date of conversion.

Always its adjusted basis on the date of conversion.

Always its fair market value on the date of conversion.

Always the higher of its adjusted basis or fair market value on the date of conversion.

None of the above.