QUESTION 6

Dan, who is single, redeems Series EE savings bonds receiving $9,000 of principal and $6,000 of interest. Dan's modified adjusted gross income is $60,000, so he is not affected by the phaseout rules. What are the tax consequences if Dan uses the proceeds to pay qualified higher education expenses totaling $15,000?

	a.	He is taxable on $9,000 of the proceeds received
	b.	He is taxable on $6,000 of the redemption proceeds, representing the accrued interest
	c.	All $6,000 of accrued interest income can be excluded from income
	d.	He is taxable on the entire $15,000 received

1 points

QUESTION 7

Naomi sells land (adjusted basis of $100,000) to her adult son, Sean, for its appraised value of $90,000. Which of the following statements is correct?

	a.	Naomi recognizes a loss of $10,000 ($90,000 amount realized $100,000 adjusted basis).
	b.	Naomi's loss is disallowed and, if Sean subsequently sells the land for $105,000, he has no recognized gain or loss.
	c.	Sean's adjusted basis for the land is $100,000 ($90,000 price he paid + $10,000 disallowed loss for Naomi).
	d.	Naomi's loss is disallowed and, if Sean subsequently sells the land for $105,000, he has a recognized gain of $5,000.

1 points

QUESTION 8

This year, Harry hires and pays in house lobbying fees of $1,700 to lobby against proposed legislation that Harry believes may hurt his business. How much, if any, of the lobbying expense may Harry's business deduct in the current year?

	a.	$0
	b.	$1,700
	c.	$850 (50% 0f $1,700)
	d.	the maximum de minimis limit of $2,000

1 points

QUESTION 9

Janice is a CPA who has a small tax practice in addition to working as the controller for a local manufacturing business. She runs her tax practice out of a 200 square foot office in her home where she meets clients and works on their tax returns and researches their tax issues. She meets the exclusive use test for this space. The gross income from her tax practice amounts to $9,500 for the year. Business expenses amount to $2,000. Based on square footage, $5,000 of Janice's mortgage interest and real estate taxes are allocable to the home office. The allocable portion of maintenance, utilities, and depreciation is $4,000. Assuming no other expenses related to the business were incurred, what amount of the maintenance, utilities, and depreciation is deductible by Janice?

	a.	$1,500
	b.	$2,500
	c.	$0
	d.	$4,000

1 points

QUESTION 10

Susan participated in a Section 529 qualified tuition program for the benefit of her son. She invested $4,000 in the fund. Four years later her son withdrew $7,000, the entire balance in the program, to pay his college tuition. Which of the following is correct?

	a.	Susan is not required to include the $3,000 ($7,000 $4,000) in her gross income when the funds are used to pay the tuition.
	b.	Susans son must include the $3,000 ($7,000 $4,000) in his gross income when the funds are used to pay the tuition.
	c.	Susans son must include $7,000 in his gross income.
	d.	Susan must include $7,000 in her gross income.

1 points