Flag question: Question 270

Question 2701 pts

George sold a computer that was used 100% in his business for $500. The computer was fully depreciated on the date of the sale, and subject to depreciation recapture per Internal Revenue Code Section 1245. The gain on the sale was $500. There was $300 of depreciation on the computer that was recaptured per Internal Revenue Code Section 1245. Which of the following is true in regards to the $300 of depreciation recapture?

Group of answer choices

The $300 will be treated as a short term capital gain.

The $300 will be treated as a long term capital gain.

The $300 will be treated as ordinary income.

The $300 is non taxable income.

Flag question: Question 271

Question 2711 pts

Reggie's business had the following financial information for 2021:

Gross Receipts: $500,000 Cost of Goods Sold: $300,000

What is the gross profit in Reggie's business?

Group of answer choices

$200,000

$300,000

$500,000

$0

Flag question: Question 272

Question 2721 pts

Which of the following is NOT true regarding the valuation of inventory for income tax purposes?

Group of answer choices

Inventory rules should follow the best accounting practice in a trade or business

The valuation of inventory should clearly reflect the income of the business

A physical inventory must be taken on the last day of the tax year.

Inventory should be valued at lower of cost or market

Flag question: Question 273

Question 2731 pts

John owns a family farm. He reports the profit and loss from his farming business on which of the following tax forms?

Group of answer choices

Schedule F

Schedule C

Schedule D

Schedule G

Flag question: Question 274

Question 2741 pts

In 2020, Peter received a $10,000 bonus from his employer. The $10,000 was included in Peter's 2020 taxable income. In 2021, Peter's employer determined that Peter should not have gotten a bonus, and Peter was forced to refund $10,000 to his employer. Under the claim of right doctrine, which of the following is correct?

Group of answer choices

Peter cannot take a deduction for the $10,000 refund.

Peter can take a miscellaneous itemized deduction for $10,000 in 2021.

Peter should file a Form 1040x for 2020 and claim an additional $10,000 miscellaneous itemized deduction

Peter can take a credit of $10,000 on his 2021 income tax return.

Flag question: Question 275

Question 2751 pts

In 2021, Candice was 40 years old. She withdrew $10,000 from her Individual Retirement Account, which is a qualified retirement plan. She spent the $10,000 on a vacation. What are the Federal Income Tax consequences of the $10,000 withdrawal?

Group of answer choices

Candice includes the $10,000 in her Adjusted Gross Income, and has an additional $1,000 penalty tax.

Candice includes the $10,000 in her taxable income, but she is not subject to a penalty tax.

Candice includes $0 in her taxable income, and has an additional $1,000 penalty tax.

Candice includes $0 in her taxable income and is not subject to a penalty tax.

Flag question: Question 276

Question 2761 pts

Which of the following is true for employer contributions to a qualified Simplified Employee Pension Plan (SEP), or a Savings Incentive Match Plan for Employees (SIMPLE)?

Group of answer choices

Employees include the amount of employer contributions as taxable income in the year the employer makes the contributions.

Employers cannot take a deduction for contributions made to a qualified SEP or SIMPLE plan.

Employers recognize a deduction for contributions to SEP and SIMPLE plans when the employee withdraws funds from the SEP or SIMPLE plan.

Employer contributions to qualified plans are immediately tax deductible for the employer.

Flag question: Question 277

Question 2771 pts

Which of the following withdrawals from an Individual Retirement Account would result in a 10 percent penalty tax on the withdrawal?

Group of answer choices

The taxpayer used the withdrawn funds to pay for medical expenses in excess of 10% of their Adjusted Gross Income.

The taxpayer making the withdrawal is under the age of 59.

The taxpayer used the withdrawn funds for qualified higher education expenses.

The taxpayer used the withdrawn funds to pay for first time home buyer expenses of up to $10,000.

Flag question: Question 278

Question 2781 pts

In 2021, Cecilia is 60 years old, and her Adjusted Gross Income is $50,000. Her filing status is Single. Cecilia is an active participant in a pension plan with her employer. In 2021, what is her maximum contribution to an Individual Retirement Account that would be fully deductible?

Group of answer choices

$7,000

$0

$6,000

$19,500

Flag question: Question 279

Question 2791 pts

In 2021, Neil and Jane are married, and both are 40 years old. Their filing status is Married Filing Joint. Neil does not work and has no wage income. Jane is employed, and has $75,000 in wage income. In 2021, Neil and Jane's Adjusted Gross Income is $85,000. Jane is an active participant in a pension plan with her employer. In 2021, what is the maximum contribution to Neil and Jane's Individual Retirement Account (IRA) that would be fully deductible?

Group of answer choices

$6,000 to Neil's IRA, and $6,000 to Jane's IRA.

$0 to Neil's IRA, and $6,000 to Jane's IRA

$7,000 to Neil's IRA, and $7,000 to Jane's IRA

$0 to Neil's IRA, and $7,000 to Jane's IRA.