this is a test from my federal tax accounting class for $40

1. Evelyn sold her personal residence to Drew on March 1 for $300,000. Before the sale, Evelyn paid the real estate taxes of $3,000 for the calendar year. For income tax purposes, the real estate tax deduction is apportioned as follows: $750 to Evelyn and $2,250 to Drew. Drew's basis in the residence is: $297,750. $299,250. $300,750. $302,250. None of the above 2. (TCOs 3, 4, 5, & 7) Lilly made the following gifts during the year: To Lola, a key client ($10 of the amount listed was for gift wrapping) To Jonelle, Lilly's secretary, on Jonelle's birthday To Gerard, Lilly's boss, at Christmas $40 $40 $80 Presuming proper substantiation, Lilly's deduction is: (Points : 5) $60. $85. $80. $160. None of the above 3. (TCOs 3, 4, 5, & 7) Denice's regular income tax liability is $200,000, and her tentative AMT is $270,000. Denice's AMT is: (Points : 5) $0. $70,000. $270,000. $370,000. None of the above 4. (TCOs 3, 4, 5, & 7) Which of the following adjustments or preferences applies to individuals? (Points : 5) 10-year mining and exploration expenditure amortization Excess of MACRS over ADS depreciation on real and personal property placed in service after 1986 Intangible drilling costs All of the above None of the above 5. (TCOs 3, 4, 5, & 7) Which of the following qualifies for the medical expense deduction? (Points : 5) Funeral expenses Toiletries Nonprescription drugs Weight reduction programs related to obesity None of the above 6. (TCOs 3, 4, 5, & 7) Which of the following types of allowable deductions can be claimed as a deduction from AGI? (Points : 5) Moving expenses Alimony expense Home mortgage interest expense Student loan interest expense All of the above 7. (TCOs 3, 4, 5, & 7) Which of the following is not an itemized deduction allowed for AMT purposes? (Points : 5) Casualty losses Gambling losses State income taxes Medical expenses in excess of 10% of AGI None of the above 8. (TCOs 3, 4, 5, & 7) Daisy is the manager of a motel. The employer gives Daisy the option of cash of $800 per month or rent-free housing. Daisy elects the rent-free housing and considers this a fringe benefit, since she would otherwise be required to pay $750 per month rent. The room that Daisy occupies normally rented for $50 per night, or $1,500 per month. On average, 90% of the motel rooms are occupied. As a result of this rent-free use of a room, Daisy is required to include in gross income: (Points : 5) $0. $800 per month. $1,350 ($1,500 X .90 = $1,350) per month. $1,500 per month. None of the above 9. (TCOs 7, 8, & 9) Matt and Shanekwa, ages 45 and 44, respectively, file a joint tax return for 2011. They provided all of the support for their 24-year-old son, who had $2,500 of gross income. Their 23-year-old daughter, a full-time student until her graduation on June 14, 2011, earned $6,000, which was 45% of her total support during 2011. Her parents provided the remaining support. Matt and Shanekwa also provided total support for Shanekwa's father who is a citizen and life-long resident of Portugal. How many personal and dependency exemptions can Matt and Shanekwa claim on their 2011 income tax return? (Points : 5) Five Four Three Two None of the above 10. (TCOs 2, 8, & 9) Jared and Angela are married and under 65 years of age. During 2011, they furnish more than half of the support of their 18-year-old son, Adam. Adam earns $7,500 from a part-time job, most of which he sets aside for future college expenses. During 2011, they also furnish more than half of the support of their 25-year-old son, Aaron, who is a full-time college student. Aaron earns $4,500 from a part-time job, most of which he currently spends for college expenses. Jared and Angela also provide more than half of the support of Jared's cousin who lives with them for the entire year. How many personal and dependency exemptions should Jared and Angela claim? (Points : 5) Two Three Four Five 11. (TCOs 2, 8, & 9) Trigger Inc. provides group term life insurance only to the officers of the corporation. Carlota, a vice president, received $250,000 of coverage for the year at a cost to Trigger Inc. of $1,600. The uniform premiums (based on Carlota's age) are $6 a year for $1,000 of protection (i.e., $1,500 for Carlota). How much must Carlota include in gross income this year? (Points : 5) $0 $1,200 $1,500 $1,600 None of the above 12. (TCOs 2 & 11) In 2011, Jose pays $5,000 to become a charter member of Private University's Athletic Council. The membership ensures that Jose will receive choice seating at all of Private's home football games. Also in 2011, Jose pays $1,000 (the regular retail price) for season tickets for himself and his wife. For these items, how much qualifies as a charitable contribution? (Points : 5) $0 $1,000 $4,000 $6,000 None of the above 13. (TCOs 2 & 11) Nicholas loaned Lyle (a friend) $30,000 in 2009 with the agreement that the loan would be repaid in two years. In 2010, Lyle filed for bankruptcy and Nicholas learned that he could expect to receive $0.50 on the dollar. In 2011, final settlement was made and Nicholas received $16,000. Assuming the loan is a nonbusiness bad debt, how should Nicholas account for the bad debt? (Points : 5) $14,000 ordinary loss in 2011 $15,000 ordinary loss in 2010, and $9,000 ordinary loss in 2011 $14,000 short-term capital loss in 2011 $15,000 short-term capital loss in 2010, and $9,000 short-term capital loss in 2011 None of the above 14. (TCOs 2 & 11) In the case of a retailer with average annual gross receipts of $900,000: (Points : 5) The installment method can be used to report income from the sale of inventory. The cash method can be used for sales and cost of goods sold. The accrual basis must be used for sales and cost of goods sold. The cash method is required. None of the above 15. (TCOs 2 & 11) Jojo decided to care for her Uncle Vince in his old age. Jojo was unaware that her uncle had securities valued with a fair market value of $75,000 at the time she started caring for her uncle. Uncle Vince made no promise to Jojo regarding payment for his care. However, the cost of comparable care in a nursing home would have been $50,000. Vince executed a will that gave the securities to Jojo. The fair market value of the securities at the time of Vince's death was $175,000. Jojo was Vince's favorite relative, and Jojo did not need the money. Jojo's gross income from the receipt of the stock is: (Points : 5) $0. $50,000. $75,000. $175,000. None of the above 1. (TCO 1) Which of the following is a judicial source of the tax law? (Points : 5) Revenue Procedure 99-12 108 T.C. 384 (1997) 61 of the Internal Revenue Code All of the above None of the above 2. (TCOs 2, 3, 6, 8, 9, & 10) Jude has a NLTCG of $25,000 and a NSTCL of $30,000. What is Jude's 2011 capital loss deduction if Jude's adjusted gross income for 2011 (before considering capital asset transactions) is $90,000? (Points : 5) $90,000 $30,000 $25,000 $3,000 None of the above 3. (TCOs 2, 3, 6, 8, 9, & 10) Sanford is in the farming business. During the year, a tornado destroyed one of his barns. The adjusted basis of the barn was $90,000. The amount of the damage was complete destruction. The barn was not insured. If Sanford has adjusted gross income for the year of $100,000 (before considering the $90,000 loss), determine the amount of loss he can deduct on his income tax return for the current year. (Points : 5) $0 $90,000 $89,900 $79,900 None of the above 4. (TCOs 2, 3, 6, 8, 9, & 10) An office audit: (Points : 5) can often be resolved by correspondence between the IRS and the taxpayer. involves numerous items reported on the return and is conducted in the office of the taxpayer's representative. usually is restricted in scope and is conducted in the IRS office. involves complex issues that are broad in scope. All of the above 5. (TCOs 2, 3, 6, 8, 9, & 10) What is the name given to a tax imposed on the increment in value as goods move through production and manufacturing stages to the marketplace? (Points : 5) Value added tax National sales tax Flat tax Level tax All of the above 6. (TCOs 2, 3, 6, 8, 9, & 10) In 2011, Seth had the following transactions: Alimony received Salary earned Cash dividends received on stock investment Bequest received Seth's AGI for 2011 is: (Points : 5) $30,000. $35,000. $36,000. $56,000. None of the above $5,000 $30,000 $1,000 $20,000 7. (TCO 6) Eighteen-year residential real property owned by an individual has accumulated accelerated depreciation of $275,000 at January 1, 2011. If depreciation had been computed under the straight-line method, accumulated depreciation would be $200,000. The property is sold on January 1, 2011 with a recognized gain of $300,000. What is the amount of depreciation recapture? (Points : 5) $75,000 $200,000 $275,000 $300,000 None of the above 8. (TCO 6) Tiffany gives her niece a machine to use in her business with a fair market value of $100,000 and a basis in Tiffany's hands of $150,000. What is the niece's basis for depreciation (cost recovery)? (Points : 5) $0 $100,000 $125,000 $150,000 None of the above 9. (TCO 6) Vivian and Leonard exchange real estate in a like-kind exchange. Vivian's basis in the real estate, subject to a $150,000 mortgage, is $220,000 and the fair market value is $300,000. She receives real estate with a fair market value of $150,000, and Leonard assumes the mortgage. What is Vivian's recognized gain and adjusted basis for the real estate received? (Points : 5) $0; $240,000 $80,000; $150,000 $80,000; $300,000 $150,000; $300,000 None of the above 10. (TCO 6) Which of the following is 1231 property? (Points : 5) Livestock held for dairy purposes Property where casualty losses exceed casualty gains for the taxable year Property not held for the long-term holding period Real property held for investment None of the above 11. (TCOs 2, 6, & 11) Roman purchases land for $150,000. He incurs legal fees of $1,000 associated with the purchase. He subsequently incurs additional legal fees of $6,500 in having the land rezoned from agricultural to residential. He subdivides the land and installs streets and sewers at a cost of $200,000. What is Roman's basis for the land and the improvements? (Points : 5) $150,000 $350,000 $351,500 $357,500 None of the above 1. Caroline and Clint are married, have no dependents, and file a joint return in 2011. Use the following selected data to calculate their federal income tax liability. AMTI Regular income tax liability AMT tax preferences $325,000 $61,001 $107,000 2. Margaret is trying to decide whether or not to place funds in a qualified tuition program. Her son will be attending college in four years. She is in the 35% marginal tax bracket and she believes she can earn 7% before tax return on alternative investments. Thus, $10,000 will accumulate to $11,948 (after-tax) in four years. Margaret expects tuition to increase at the rate of 5% each year to $12,155 in four years. Her son will be in the 15% marginal tax bracket in all relevant years. Given these assumptions, should Margaret participate in the qualified tuition program? 3. In connection with facilitating the function of the IRS in the administration of the tax laws, comment on the utility of the following: I) the power to make adjustments to properly reflect a taxpayer's income, and II) the availability of interest and penalties for taxpayer noncompliance. 4. Steve has a tentative general business credit of $85,000 for the current year. His net regular tax liability before the general business credit is $95,000, and his tentative minimum tax is $90,000. Compute Steve's allowable general business credit for the year. 1. Morgan inherits her father's personal residence, including all of the furnishings. She plans to add a swimming pool and sauna to the property and rent it as a furnished house. What are some of the ad valorem property tax problems Morgan can anticipate? 3. Rachel owns rental properties. When Rachel rents to a new tenant, she usually requires the tenant to pay an amount in addition to the first month's rent. The additional amount serves as security for damages to the property and the tenant's failure to pay future rents. How should the payments be characterized (e.g., on lease documents) to minimize Rachel's current tax liability? 4. DeWayne is a U.S. citizen and resident. He spends much of each year in the United Kingdom on business. He is married to Petula, a U.K. citizen and resident of London. DeWayne has heard that it is possible that he can file a joint income tax return for U.S. purposes. If this is so, what are the constraints he should consider in making any such decision