1. Sally is a cash basis taxpayer and a member of the Valley Barter club. This year Sally provided 100 hours of sewing services to the barter club in exchange for two football playoff tickets. Which of the following is a true statement? A. Sally need not recognize any gross income unless she sells the football tickets. B. Sally is taxed on the value of services provided to anyone including the club. C. Sally is taxed on the value of the football tickets even if she cannot attend the game. D. Sally is taxed on the value of her sewing services only if she is a professional seamstress. E. All of the above are true. 2. This year Barney purchased 500 shares of Bell common stock for $20 per share. At year-end the Bell shares were only worth $2 per share. What amount can Barney deduct as a loss this year? A. $10,000 B. $9,000 C. $1,000 D. Barney can deduct $10,000 only if he includes $1,000 in his taxable income E. None of the above - Barney is not entitled to a loss deduction. 3. Hillary is a cash-basis calendar-year taxpayer. During the last week of December she received a letter containing a $5,000 check for services. Which of the following is a true statement? A. Hillary is taxed on the $5,000 of service income in the year she cashes the check. B. Hillary is taxed on the $5,000 of service income in the year the check was mailed. C. Hillary is taxed on the $5,000 of service income in the year she receives the check. D. Hillary is taxed on the $5,000 of service income in the year she provides the services. E. None of the above is true. 4. Identify the rule that determines whether a taxpayer must include in income a refund of an amount deducted in a previous year: A. Tax refund rule B. Constructive receipt C. Return of capital principle D. Tax benefit rule E. None of the above 5. Dave is a plumber who uses the cash method of accounting. This year Dave requested that his clients make their checks payable to his son, Steve. This year Steve received checks in the amount of $62,000 for Dave's plumbing services. Which of the following is a true statement? A. Dave is taxed on $62,000 of plumbing income this year. B. Steve is taxed on $62,000 of plumbing income this year. C. Steve is taxed on $62,000 of income from gifts received this year. D. Dave is not entitled to give his income to a related taxpayer. E. All of the above are true