TRUE Or False.

1. If fraud is involved, there is no time limit on the assessment of a deficiency by the IRS.

____ 2. A Revenue Ruling is a judicial source of Federal tax law.

____ 3. Bree received a scholarship to be used as follows: tuition $8000; room and board $11,000; and books and laboratory supplies $4,000. Bree is required to include only $12,000 in her gross income.

____ 4. Two-thirds of treble damage payments under the antitrust law are deductible.

____ 5. Bill wants to give his son $3,000 for his graduation. As an alternative, he suggests that he pay the sales taxes on his car. If Bill pays the sales taxes, he cannot deduct them.

____ 6. For purposes of the 267 loss disallowance provision, a taxpayers aunt is a related party.

____ 7. A bona fide debt cannot arise on a loan between father and son.

____ 8. The concept of depreciation assumes that the asset has a determinable useful life.

____ 9. Motel buildings are classified as residential rental real estate.

____ 10. A purchased trademark is a 197 intangible.

____ 11. If startup expenses total $52,000 in 2015, $3,000 is expensed.

____ 12. When contributions are made to a Roth IRA, they are deductible by the participant. Later distributions from a the IRA, however, are fully taxed.

____ 13. Gorgi contributed $3,500 to a qualifying Health Savings Account in 2016. The entire amount qualifies as a medical expense and is potentially deductible from AGI.

____ 14. Sedie mailed a check for $2,200 to a qualified charitable organization on December 30, 2015. The $2,200 contribution is deductible on Sedies 2015 tax return.

____ 15. Jim is the sole owner and a material participant in a business in which he has $40,000 at risk. If the business incurs a loss of $45,000 from operations, Jim can deduct $45,000.

____ 16. In the current year, Jan invests $40,000 for a 10% interest in a passive activity. Her share of the loss this year is $20,000. If this is her only passive activity, the $20,000 loss from the activity this year is suspended for use in a future year.

____ 17. Juls tentative AMT is $84,000. Her regular income tax liability is $73,000. Juls AMT is $22,000.

____ 18. The tax benefit received from a tax credit is affected by the tax rate of the taxpayer.

____ 19. The credit for child and dependent care expenses is an example of a refundable credit.

____ 20. The purpose of the work opportunity tax credit is to encourage employers to hire individuals from specified target groups traditionally subject to high rates of unemployment.

____ 21. Molanda sells a parcel of land for $54,000 in cash and the buyer assumes Molandas mortgage of $32,000 on the land. Molanda pays a real estate agent $3,000 on the transaction. Molandas amount realized is $86,000.

____ 22. Cassie purchases a sole proprietorship for $130,000. The fair market value of the tangible assets is $110,000 and the agreed to value of goodwill is $15,000. Assuming there are no other intangible assets, Cassies basis for the tangible assets is $115,000 and her basis for the goodwill is $15,000.

____ 23. Sam purchased an SUV for $52,000 which he uses 100% for personal purposes. When the SUV is worth $19,000, he contributes it to his business. The gain basis is $52,000, the loss basis is $19,000, and the basis for cost recovery is $52,000.