Max and Alexandra are married and incur $$5,500$ of qualifying expenses to care for their two children, ages $2$ and $5.$ Max's earned income is $$35,000$ and Alexandra's earnings from a part$-$time job are $$5,000.$ What is the amount of the qualifying expenses for purposes of computing the child and dependent care credit?

Select one:

a$.$

$$3,000$

b$.$

$$5,000$

c$.$

$$5,500$

d$.$

$$6,000$

Question $39$

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Mingming and Xavier, unrelated single taxpayers, have each incurred a $$1,000$ expenditure. Before considering this expenditure, Mingming has taxable income of $$500,000$ and Xavier has taxable income of $$32,000.$ Assume the expenditure qualifies as either a tax deduction or a $25\%$ credit. Which of the following statements is correct?

Select one:

a$.$

Mingming will prefer the credit, but Xavier will prefer the deduction.

b$.$

Mingming will prefer the deduction, but Xavier will prefer the credit.

c$.$

Both taxpayers will prefer the credit.

d$.$

Both taxpayers will prefer the deduction.

Question $40$

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Pierce has a $$16,000$ Section $1231$ loss, a $$12,000$ Section $1231$ gain, and a salary of $$50,000.$ What is the treatment of these items in Pierce's AGI?

Select one:

a$.$

Pierce has a LTCG of $$12,000$ and a net ordinary income of $$34,000.$

b$.$

The $1231$ gains and losses are treated as ordinary gains and losses making Pierce's AGI for the year $$46,000.$

c$.$

Pierce has a $$3,000$ LTCL which is deductible for AGI making AGI $$47,000.$ He also has a $$1,000$ LTCL carryover.

d$.$

Pierce has net LTCG of $$9,000$ and $$37,000$ of net ordinary income.

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Reva and Josh Lewis had alternative minimum taxable income of $$350,000$ in $2016$ and file a joint return. For purposes of computing the alternative minimum tax, their exemption is

Select one:

a$.$

$$36,225.$

b$.$

$$47,575.$

c$.$

$$0.$

d$.$

$$83,800.$

Question $42$

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Rex has the following AMT adjustment factors: $1.$ Depreciation of real property acquired in $1996$ using MACRS is $$22,000$ while depreciation for AMT purposes is $$15,000.2.$ R&E expenditures amounting to $$60,000$ are expensed. The net adjustment is

Select one:

a$.$

$$7,000.$

b$.$

$$54,000.$

c$.$

$$61,000.$

d$.$

$$67,000.$

Question $43$

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Ross purchased a building in $1985,$ which he uses in his manufacturing business. Ross uses the ACRS statutory rates to determine the cost$-$recovery deduction for the building. Ross's original cost for the building is $$500,000$ and cost$-$recovery deductions allowed are $$500,000.$ If the building is sold for $$340,000,$ the tax results to Ross are

Select one:

a$.$

$$340,000$ LTCG$.$

b$.$

$$340,000$ Sec. $1231$ gain.

c$.$

$$340,000$ Sec. $1245$ ordinary income.

d$.$

$$340,000$ Sec. $1250$ ordinary income.

Question $44$

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Section $1231$ property will generally have all the following characteristics except

Select one:

a$.$

real or depreciable property.

b$.$

used in trade or business.

c$.$

held for sale to customers.

d$.$

held for more than one year.

Question $45$

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Suzanne, a single taxpayer, has the following tax information for the current year. $1).$ Charitable contribution of real property with a FMV of $$25,000($adjusted basis $$20,000)$ for which a $$25,000$ deduction was taken for regular tax. $2).$ Research and experimental expenses of $$40,000$ deducted in full for regular tax. Suzanne's total tax preferences and adjustments equals

Select one:

a$.$

$$5,000.$

b$.$

$$36,000.$

c$.$

$$41,000.$

d$.$

$$45,000.$

Question $46$

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Tanya has earnings from self$-$employment of $$240,000,$ resulting in self$-$employment tax of $$21,122$ and Additional MedicareTax of $$360.$ Due to these taxes, Tanya will be allowed a deduction for AGI of

Select one:

a$.$

$$10,741.$

b$.$

$$21,482.$

c$.$

$$10,561.$

d$.$

$$21,122.$

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Terry has sold equipment used in her business. She acquired the equipment three years ago for $$50,000$ and has recognized $$30,000$ of depreciation across the years in use. In order to recognize any Sec. $1231$ gain, she must sell the equipment for more than

Select one:

a$.$

$$0.$

b$.$

$$20,000.$

c$.$

$$30,000.$

d$.$

$$50,000.$

Question $48$

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Which of the following assets is $1231$ property?

Select one:

a$.$

a machine used in the company's manufacturing operations

b$.$

an investment in corporate stock

c$.$

land held for investment

d$.$

items held for resale by a retailer

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