(TCO E) Betty Brewster received the following interest.

• Luggage gift for purchasing a four-year certificate of deposit (fair market value): $50
• Interest on passbook savings account: $15
• Interest on certificate of deposit: $200
• Dividends on share account savings in credit union: $150
• Interest on State of Mississippi bonds issued to finance state highway construction: $300

What is the amount of interest income to be included in income?(Points : 10)

Question 17.17.(TCO G) Would any of the following items be deductible on an individual's income tax return? If so, would the item be deductiblefor orfromAGI? Explain each item. (a) Hobby expenditures of $2,000 in excess of hobby gross income (b) $3,000 loss on the sale of a personal sailboat (c) Interest of $8,000 on money borrowed to purchase tax-exempt securities(Points : 10)

Question 18.18.(TCO D,E) Zeke, a wealthy farmer, constructed a barn in March 1986 for $10,000. He claimed $6,500 of accelerated depreciation while straight line depreciation would have been only $5,600. He sells the barn for $8,900. If he had no other Section 1231 transactions, what gain would be recognized from this sale? Include both the amount and nature of the gain. (Points : 10)

Question 19.19.(TCO D,E) On November 28, 2015 a taxpayer purchased for $2,000,000 a rental building with commercial stores on the first floor (Total Monthly Rent $10,000) and apartments on the upper two floors (Total Monthly Rent $4,000). Compute the taxpayer's depreciation deduction for 2015 and 2016, assuming the building is sold on March 2, 2016. (Points : 10)

Question 20.20.(TCO I) Jake, a single individual with a salary of $40,000, paid the following expenses during the year. Alimony: $8,000 Charitable contributions: $2,000 Casualty loss (after $100 floor): $1,000 Mortgage interest on personal residence: $3,000 Moving expenses: $1,500 Student loan interest: $1,000 Contribution to a traditional IRA: $2,000 Analyze the above expenses, and determine which ones are deductible for AGI. Please support your position.(Points : 10)

Question 21.21.(TCO F) (Becker CPA Review Course, Reg. 1) Smith has an adjusted gross income (AGI) of $120,000 without taking into consideration $40,000 of losses from rental real estate activities. Smith actively participates in the rental real estate activities. What amount of the rental losses may Smith deduct in determining taxable income?(Points : 25)

Question 22.22.(TCO D) During 2015 Paxton, Inc., a calendar year taxpayer, placed the following property in service on the dates noted (ignore the Section 179 deduction and bonus depreciation): 3/15/15 7 year property costing $295,000 12/1/15 5 year property costing $205,000 a) If no other properties were placed in service in 2015, determine Paxton's 2015 and 2016 depreciation deductions under MACRS. b) If both properties had been placed in service on March 15, determine Paxton's 2015 and 2016 depreciation deductions under MACRS. (Points : 25)

Question 23.23.(TCO B, E) Mr. Green and Mr. Brown form a corporation to carry on a new business. In exchange for $175,000 worth of the new corporation's stock, Green transferred to the corporation $25,000 in cash and Properties A and B. Property A had a value of $75,000 and a basis of $50,000. Property B had a value of $100,000 and a basis of $75,000 was subject to a $25,000 mortgage. In exchange for $50,000 worth of the new corporation's stock, Brown transferred to the corporation $25,000 in cash and Property C. Property C had a value of $175,000, a basis of $100,000 and was subject to a $150,000 mortgage. a) Is gain or loss recognized on any of the transfers? If so, to whom and how much? b) Determine the basis of each shareholder's stock in the new corporation. c) Determine the basis of each property in the hands of the corporation. (Points : 25)

Question 24.24.(TCO F) (Becker CPA Review Exam Reg. 1) Randolph is a single individual who always claims the standard deduction. Randolph received the following in the current year.

Wages	$ 30,000
Unemployment compensation	6,000
Pension distribution (100% taxable)	4,000
A state tax refund from the previous year	650

What is Randolphs gross income?(Points : 25)

Question 25.25.(TCO H) On May 18, 2012, Sara purchased 30 shares of ABC stock for $210, and on October 29, 2012, she purchased 90 additional shares for $900. On November 28, 2012, she sold 48 shares, which could not be specifically identified, for $576, and on December 8, 2012, she sold another 25 shares for $150. What is her recognized gain or loss?(Points : 25)