Question
. From the records of Tom, a cash basis sole proprietor, the following information was available: Gross receipts $30,000 Dividend income (on personal investments) $
. From the records of Tom, a cash basis sole proprietor, the following information was available:
Gross receipts | $30,000 |
Dividend income (on personal investments) | $ 200 |
Cost of sales | $15,000 |
Other operating expenses | $ 3,000 |
State business taxes paid | $ 300 |
What amount should Tom report as net earnings from self-employment?
a. | $10,900 |
b. | $11,700 |
c. | $12,000 |
d. | $15,000 |
e. | None of the above |
3. Which of the following is not an acceptable method of accounting under the tax law?
a. | The accrual method |
b. | The cash method |
c. | The hybrid method |
d. | All of the above are acceptable |
e. | None of the above |
4. Becky is a cash basis taxpayer with the following transactions during her calendar tax year:
Cash basis revenue | $54,000 |
Cash basis expenses, except rent | $25,000 |
Rent expense (paid on December 1) for use of a building for 18 months | $36,000 |
What is the amount of Beckys taxable income from her business for this tax year?
a. | $17,000 |
b. | $23,000 |
c. | $25,000 |
d. | $27,000 |
e. | None of the above |
5. Jenny constructed a building for use as a residential rental property. The cost of the building was $180,000, and it was placed in service on August 1, 1990. The building has a 27.5-year MACRS life. What is the amount of depreciation on the building for 2015 for tax purposes?
a. | $2,000 |
b. | $6,000 |
c. | $3,000 |
d. | $6,547 |
e. | None of the above |
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