need help on tax homework -- especially problems -- multiple choice - dont really need help but problems is the goal for my homework to be completed...

1.The Dot Corporation has changed its year-end from a calendar year-end to July 31. The income for its short period from January 1 to July 31 is $35,000. The tax for this short period is: $5,250 $5,833 $9,000 $10,000 2. Mark the correct answer. In cash basis accounting, for tax purposes: Income is recognized when it is actually or constructively received and expenses are recognized when they are actually or constructively incurred, regardless of when paid. Income is recognized when it is earned regardless of when received and expenses are recognized when they are actually or constructively incurred. Income is generally recognized when it is actually or constructively received and expenses are generally recognized when they are paid. The cash basis is not allowed for businesses reported on Schedule C. 3. Which of the following is not an acceptable method of accounting under the tax law? The accrual method The cash method The hybrid method All of the above are acceptable None of the above 4. From the records of Tom, a cash basis sole proprietor, the following information was available: Gross receipts Dividend income (on personal investments) Cost of sales Other operating expenses State business taxes paid $30,000 200 15,000 3,000 300 What amount should Tom report as net earnings from self-employment? $10,900 $11,700 $12,000 $15,000 None of the above 5. Vernon is a cash basis taxpayer with a calendar tax year. On November 1, 2012, Vernon entered into a lease to rent a building for use in his business at $4,000 a month. On that day Vernon paid 6 months rent on the building, a total of $24,000 ($4,000 x 6 months). How much may Vernon deduct for rent expense on his 2012 tax return? $4,000 $8,000 $16,000 $24,000 None of the above 6. Which one of the following entities cannot use the cash method for tax purposes? A large almond farm with $40 million in gross receipts. A continuing education provider with $2 million in gross receipts and 20 employees. A nationwide law firm with $5.4 million in gross receipts. A small sole proprietorship with $150,000 in gross receipts. All of the above may use the cash method. 7. Carol constructed a building for use in her business (non-residential building). The cost of the building was $180,000, and it was placed in service on August 1, 2000. The building has a 27.5 year MACRS life. What is the amount of depreciation on the building for 2012, using conventional straight-line depreciation? $2,000 $2,500 $3,000 $6,547 8. Walnut Interests is a partnership owned equally by Bob, Jon, and Gary. Bob and Jon each have a November 30 tax year-end, while Gary has a January 31 tax year-end. Under the general rule, what tax year-end should the partnership adopt? December 31 January 31 November 30 November 30 or January 31 9. Which one of the following is a Section 197 intangible? a. b. c. d. e. Computer software available for purchase by the general public A building A stock investment An interest-earning certificate of deposit Goodwill 10. What is the minimum number of years over which computers may be depreciated under MACRS? Three years Five years Seven years Ten years 11. Cork Oak Corporation purchased a heavy-duty truck (not considered a passenger automobile for purposes of the listed property and luxury automobile limitations) on June 1, 2012 for use in its business. The truck, with a cost basis of $18,000, has a 5-year estimated life. It also is 5-year recovery property. How much depreciation should be taken on the truck for the 2012 calendar tax year using the conventional (for financial accounting purposes) straight-line depreciation method? $1,800 $2,100 $2,567 $3,600 None of the above 12. Grevilla Inc. is an S corporation that has chosen a fiscal year ending November 30. For the fiscal year ended November 30, 2012, Grevilla Inc. had taxable income of $180,000 and the prior year made a required payment of $1,000. What is the amount of the required tax payment which should be made in 2013? $5,400 $4,400 $3,750 $2,250 None of the above 13. Section 197 intangibles: Are amortized over a 15-year period. Include goodwill, going-concern value, and information bases. Were defined in the Revenue Reconciliation Act of 1993. Are not amortized over the actual estimated useful life of the intangible asset. All of the above are true. 14.ABC Corp bought a production machine on January 1, 2011 for $30,000. The company elected out of Section 179 expensing and elected out of claiming bonus depreciation in 2011, and is depreciating the machine using the MACRS accelerated depreciation tables for 5-year property. What is the 2012 depreciation (year 2) deduction for the machine? $9,600 $24,000 $6,000 $12,000 None of the above is correct. 15. Steve Corp bought a $925,000 apartment building in 2011. $100,000 of the building cost is allocated to the value of the land. What is the maximum amount of depreciation that the company can claim in 2012 (year 2) for the building? $29,997 $825,000 under the election to expense business property. $250,000 under the election to expense business property. $82,500 You cannot depreciate property costing over $800,000. 16. Which of the following is true about the MACRS depreciation system? No salvage value is used before depreciation percentages are applied to depreciable real estate. Residential rental buildings are depreciated straight-line over 20 years . Commercial real estate buildings are depreciated over 39 years using accelerated depreciation. No matter when equipment is purchased during the month, it is considered to have been purchased mid-month for MACRS depreciation purposes. 17. During 2012, Travis purchases $130,000 of used manufacturing equipment (7-year property) for use in his business. Travis has taxable income from his business of $500,000. What is the maximum amount that Travis may deduct under the election to expense? $130,000 $18,571 $250,000 $0 None of the above 18. On June 1, 2012, Sandalwood Corporation purchases a passenger automobile for 100 percent use in its business. The automobile is in the 5-year cost recovery class and has a basis for depreciation of $30,000. Assuming that the corporation elects the accelerated method of cost recovery for the asset and does not elect to expense any of its cost or take bonus depreciation, what is the total tax depreciation deduction for the 2012 calendar tax year (Year 1)? $3,160 $3,060 $6,000 $4,287 None of the above 19. Which one of the following is a Section 197 intangible? Computer software available for purchase by the general public. A building. A stock investment. An interest-earning certificate of deposit. Goodwill. 20. On January 1, 2012, Ted purchased a small software company for $200,000. He paid $95,000 for the fixed assets of the company and $105,000 for goodwill. How much amortization may Ted deduct on his 2012 tax return for the purchased goodwill? $0 $7,000 $15,000 $21,000 $105,000 21. Section 197 intangibles: Are amortized over a 15-year period Include goodwill, going-concern value, and information bases. Were defined in the Revenue Reconciliation Act of 1993 Are not amortized over the actual estimated useful life of the intangible asset All of the above are true. 22. Which of the following taxpayers is absolutely required to report on a calendar year-end basis? a. Individuals b. Partnerships c. S corporations d. C corporations e. None of the above 23. Mary sells to her father, Robert, her shares in AA Corp for $55,000. The shares cost Mary $80,000. How much loss may Mary claim from the sale? a. b. c. d. $80,000 $55,000 $0 $25,000 From Chapter 8: 24.Which of the following is a capital asset? A literary work held by the author Real estate held by a developer A taxpayer's personal automobile A truck used in a taxpayer's business None of the above 25. Which of the following assets is not a Section 1231 asset? Equipment used in a business The unharvested crops of a farmer Timber Inventory All of the above are Section 1231 assets 26. Jones acquired raw land as an investment in 1997. The land cost $100,000. In 2012, the land is sold for a total sales price of $220,000, consisting of $20,000 cash and the buyer's note for $200,000. If Jones elects to recognize the entire gain in the year of sale, what is his recognized gain in 2012? $50,000 $60,000 $120,000 $200,000 None of the above 27. On August 8, 2012, Tom, age 62, sold for $210,000 his principal residence which had an adjusted basis of $60,000. On November 1, 2011, he purchased a new residence for $80,000. For 2012, Tom should recognize a gain on the sale of his residence of: $0 $25,000 $50,000 $130,000 28. In 2012, Sam, a single taxpayer, has taxable income of $30,000 exclusive of capital gains and losses. Sam incurred a $1,000 short-term capital loss and a $5,000 longterm capital loss. What is the amount of his long-term capital loss carryover to 2013? $0 $2,000 $3,000 $5,000 None of the above 29. Martha has a net capital loss of $20,000 and other ordinary taxable income of $45,000 for the current tax year. What is the amount of Martha's taxable income after deducting the allowed capital loss? $25,000 $35,000 $42,000 $45,000 30. Which of the following qualifies as a like-kind exchange? A chicken held by a farmer exchange for medical service A home owned and lived in by a taxpayer exchanged for a new personal residence. IBM stock exchanged for Exxon Stock A Dodge Ram pickup truck used in business traded in for a new Ford 250 pickup truck also intended for business use. 31. Sol purchased land as an investment on January 12, 2005 for $85,000. On January 31, 2012, Sol sold the land for $20,000 cash. In addition, the purchaser assumed the mortgage of $70,000 on the land. What is the amount of the realized gain (or loss) on the sale? $65,000 loss $15,000 loss $5,000 gain $90,000 gain 32. Sol purchased land as an investment on January 12, 2002 for $85,000. On January 31, 2012, Sol sold the land for $90,000 cash. What is the nature of the gain or loss? Long-term capital loss Long-term capital gain Short-term capital gain Short-term capital loss None of the above 34. Sims, a single taxpayer, bought her home in La Jolla 25 years ago for $45,000. She has lived continuously in the home since she purchased it. In December, 2012, she sells her home for $405,000. What is Sims's taxable gain on the sale? $-0$360,000 $235,000 $110,000 35. Jerry bought his home 15 years ago for $60,000. Three years ago Jerry married Debbie and she moved into the same house and has lived there since. If they sell Jerry's house in December, 2010 for $340,000, what is their taxable gain on a joint tax return? $-0$280,000 $155,000 $30,000 36. Which of the following is a capital asset? a. Inventory held by a manufacturer b. Accounts receivable held by a dentist c. All property owned by a taxpayer other than property specifically noted in the law as an exception d. Depreciable property and real estate used in a trade or business PROBLEMS 1. On September 1, 2012, David purchased manufacturing equipment for use in his business. The equipment cost $13,000, has an estimated useful life of 7 years, and an estimated salvage value of $1,000. No election to expense or use bonus depreciation is made. Calculate the amount of depreciation on the manufacturing equipment for 2012 using conventional (financial accounting, not MACRS) straight-line depreciation. (Do not use table schedule. Calculate this like you learned in accounting class) = $ ____________________ Calculate the amount of depreciation on the manufacturing equipment for 2012 using the straight-line MACRS optional method. (Use table) = $ __________________________ Calculate the amount of depreciation on the manufacturing equipment for 2012 using the accelerated MACRS method. (Use table) = $ _______________________________ . 2. Sofia is a cash basis taxpayer with the following transactions during the year: Cash received from sales of products Cash paid for expenses (except rent and interest) Rent paid on a leased building for 4 months beginning December 1 Prepaid interest on a bank loan, paid on December 1, for the next 3 months Four months' rent received on a leased building, on October 1 $85,000 30,000 12,000 6,000 8,000 Calculate Sofia's income from her business for this calendar year. Sales income Rental income Total income Expenses other than rent and interest $_________ __________ $_________ $_________ Rent Interest Total expenses Net income __________ __________ __________ $ 3. On July 2, 2012, Scott purchased a commercial building. The cost basis assigned to the building is $400,000. Scott also owns a residential apartment building he purchased on June 15, 2011 with a cost basis of $650,000. Calculate Scott's total depreciation deduction for the buildings for 2012, using the Modified Accelerated Cost Recovery System. Commercial building: = $ _________________ Residential building: = $ _____________________ Calculate Scott's total depreciation deduction for the buildings for 2012, using the Modified Accelerated Cost Recovery System. Commercial building: = $___________________ Residential building: = $ _______________________ 4. In 2012, Paul has net short-term capital losses of $3,000, a net long-term capital loss of $55,000, and taxable income from wages of $45,000. Calculate the amount of Paul's deduction for capital losses for 2012. Amount of the capital loss to be deducted for year = $ ____________ Calculate the amount and nature (short-term or long-term) of his capital loss carryforward. Balance of the loss to be carryforward = $ ____________ Nature of the loss (short term or long term) = _________________ For how many years may Paul carry the unused loss forward? _________ 5. Please give the depreciable lives for 2012 tax purposes for these assets: Automobiles _______________ Business furniture _______________ Computers _______________ Residential real estate _______________ Commercial real estate _______________ Land _______________ Purchased goodwill _______________ 6. Bev owns an apartment complex she purchased 10 years ago for $500,000 with a $100,000 cash down payment accompanied by a $400,000 loan. Bev has made $75,000 of capital improvements on the complex and her depreciation claimed on the building to date is $120,000. Calculate Bev's adjusted basis in the building. ANS: = 8. In 2012, Helen sold Section 1245 property for $6,000. The property cost $25,000 when it was purchased 5 years ago. The depreciation claimed on the property was $23,000. a.Calculate the adjusted basis of the property. = b.Calculate the amount of ordinary income under Section 1245. = c.Calculate the Section 1231 gain. =