QUESTION 43

Amy owns 100% of the stock of PBJ, Inc., with an adjusted basis of $45,000. She receives a cash distribution of $90,000 from PBJ when its current earnings and profits (E&P) is 30,00 and accumulated E&P is $35,000.Amy has a dividend of:

		$65,000
		$90,000
		$35,000
		zero
		None of the above

QUESTION 45

In order to take a deduction for an expense under the accrual method:

		All events fixing the obligation for the expense must've occurred
		The amount of the expense must be determinable with reasonable accuracy
		There must have been economic performance of at least one side of the transaction
		All of the above
		None of the above

QUESTION 46

Which of the following sources has the highest tax validity?

		Revenue Ruling
		Revenue Procedure
		Regulations
		Internal Revenue Code section
		None of these

QUESTION 47

In the year incurred, passive loss generally:

		Are not deductible
		Are deductible only when they exceed portfolio losses
		Are deductible only against passive income
		All of the above
		None of the above

QUESTION 48

Smith dies on November 26, 2020. His estate includes a home he purchased decades ago which he left to his son John. The adjusted basis of the home to Smith as of his death was $180,000, The value used in the estate tax return for the house was the Fair Market Value on the date of death of $750,000. Three years later John sells the house for $900,000. As a result John has a gain REALIZED of:

		Zero
		$570,000
		$900,000
		$150,000
		None of the above

QUESTION 49

The "at risk" limitation" provides that:

		A taxpayer can deduct any losses from a good faith business activity regardless of the extent to which the taxpayer is at-risk.
		A taxpayer's who personally guarantees his Corporation's debt financing is considered to be "at risk" in his investment in the corporation.
		Investment through an entity which provides limited liability does not affect your ability to take loss deductions under the at risk rules.
		all of the above
		None of the above

QUESTION 52

Sam has a Boot Factory with an Adjusted Basis in his hands of 250,000. He exchanges it for Bobs Boot Factory worth 500,000, and 50,000 cash. In this transaction Sam's Gain Recognized is:

		$50,000
		$300,000
		$550,000
		zero
		None of the Above

QUESTION 55

Sydney gives his son, George, a gift of a house worth 350,000, in which his adjusted basis was 600,000. George subsequently sells the house for 650,000. As a result George will REALIZE a _____ on the sale:

		Gain of $300,000
		Gain of $50,000
		Zero gain or loss
		Gain of $650,000
		None of the above

QUESTION 56

Adam has a Boot Factory with a Fair Market Value (FMV) of 500.000 which is subject to a mortgage of 70,000 and has an Adjusted Basis in his hands of 300,000. He exchanges it for Bobs Boot Factory worth 700,000 which is subject to a mortgage of 300,000 and has an adjusted basis in Bobs hands of 650,000. Bob also pays Adam 30,000 cash and each takes the others Boot Factory subject to its mortgage. In this transaction Adams Gain Recognized is:

		$800,000
		$200,000
		$30,000
		$20,000
		None of the Above

QUESTION 58

Primary sources for interpreting the tax law include:

		The internal revenue regulations
		Internal Revenue Service rulings
		Tax court decisions
		All of the above
		None of the above