TAX ACCOUNTING 2020

1) A corporation pays $45,000 in foreign income taxes to Country X. The corporations worldwide taxable income is $600,000 and its taxable income from Country X was $150,000. The tax on the $600,000 of worldwide income is $200,000. What is the corporations foreign tax credit? a. $45,000 b. $100,000 c. $50,000 d. $80,000 e. None of the above

2) Lem Lumberjack sells 100 shares of Redwood Corporation common stock for $3,500. Lem received the stock as a gift from his mother. When Lem received the gift of the stock, the fair market value of the stock $3,000. His mothers adjusted basis in the stock was $4,500. What is Lems recognized loss on the sale? a. $1,000 b. $500 c. $2,500 d. $0 e. none of the above

3) Brian Brewster sold property to a buyer who paid him $400,000 cash and who assumed an existing mortgage of $150,000 that was on the property. The property had cost $250,000. Depreciation of $100,000 has been claimed. What is the amount of realized gain?

a. $550,000 b. $300,000 c. $250,000 d. $400,000 e. none of the above

4) Joe Jimson died and property with an adjusted basis of $60,000 and a fair market value of $112,000 went to Joes beneficiary. The executor chose the alternate valuation date when the value was $110,000. What is the basis of the property to the beneficiary? a. $60,000 b. $112,000 c. $115,000 d. $120,000 e. $110,000

5) Brian Bush and Charles Chex exchange business machines. Brian gives Charles a machine with a basis of $3,500 (fair market value $3,000) plus $2,000 in cash. Charles gives Brian a machine with a basis of $4,000 and a fair market value of $5,000. What is Charless recognized gain? a. $2,000 b. $500 c. $1,000 d. $0