ver 3 [1] Lisa incurred the following business expenses during the year Penalty for breach of business contract $3.200 State sales tax penalty for late remittance 2.500 Rent expense 6,000 Office supplies 450 -Anasd Oct Early withdrawal penalty on investment account at a savings and loan 185 What are Lisa's allowable current-year deductions? A. $9.835 8. 56.635 C. $12.150 D. $12.335 [2] Unger calendar-year taxpayer, was m began business operations on June 1. Year 1. Linger had the following geen start up expenses Date Amount 2/15/Year 1 $5,000 6/15/Year 1 1.300 include all 11/1/Year 1 900 What is Linger's maximum organizational expense deduction for Year 17 A. $5.257 8. $200 C. $5,000 D. $5,086 [3] in the current year, Theresa made a gift of jewelry with an adjusted basis of $6.000 to joan. The FMV at the time of the gift was $5,000. Theresa paid a gift tax of $1.200. What are joan's bases for computing gain and loss? A B. C D. Gain $6.200 $5,000 $5,000 $6,000 $5,000 $5,000 $6.000 $5,000 [4] in the current year, Sylvia Stallone, a single taxpayer, had a salary of $21,000 and no other ordinary income. Duri the year, she had a long-term capital loss of $1.400 and a short-term capital gain of $1.500. Capital losses carried ove from previous years were as follows: Long-term capital loss carryover (20% basket) Short-term capital loss carryover $(2,400) 13.200 After deducting all possible carryovers in her current return, what are Sylvia's carryovers to the following year? A. $2,400 short-term capital loss and $100 long-term capital loss (15% basket 8. 50 short-term capital loss and $2,500 long-term capital loss (15% basket C. $1.600 short-term capital loss and $900 long-term capital loss (28% basket). D. $100 short-term capital loss and $2.400 long-term capital loss (28% basket [5] Bo purchased 100 shares of Diddley Corporation stock for $6 per share in Year 1. On July 1, Year 3, Bo sold the shares for $4 per share. On July 16, Year 3, Bo repurchased 25 shares for $5 per share. In computing Bo's Year 31 income, he may deduct a capital loss in the amount of A. $150 8. $0 $200 - $75 [6] Ms. Tyler rents her vacation home during the winter. In the current year, she used the vacation home for 16 days and rented it for 11 days. Total rental income and expenses are as follows: Rental income for 11 days Allocated interest and taxes Other allocated expenses Net rental income $1.500 (300) (100) $1,100 What is the correct amount of net rental income to be included in Ms. Tyler's current year tax retum? A. $1,500 B. 50 C. $1,100 D. $1,200 171 During the year, Nate and Olivia, a married couple filing jointly, had ordinary income totaling $50.000. In addition they had short-term capital losses of $2,000 and long-term capital losses of $8.600 what amount can Nate and Olivia report as a long-term capital loss carryover to the following year? A. $7,600 8. $5,600 C. 30 0.56.600 (8) Larry purchased Boston Celtic stock for $6,000 from his brother Kevin. Kevin had a besis in the stock of $10,000 but could not recognize his loss on the sale. Larry later sold the stock for $12.000. How much gain must Larry recognize on the subsequent sale? A. $6,000 8. $2.000 C. $12,000 D. $4,000 [9] Lancelot owns a cabin that he rented for 4 months and lived in for 2 months Lancelot received $6.000 inal income. Lancelot's total expenses were as follows: Depreciation Maintenance $3.600 2001 500 Utilities Taxes Interest 1.100 2,400 What is Lancelot's depreciation deduction based on the IRS method of allocating expenses? A. $3,200 B. $1,200 C. $2,400 D.$3,600 [10] Bonnie drove her new car, which cost $12,000, a total of 16,000 miles during the current year. Of those miles 12.000 were related to her business (Bonnie is self-employed). Bonnie paid $5.500 for gas. $1.400 for repairs, and $600 for tires during the year, ignoring Section 179 and additional first year depreciation, first-year MACRS depreciation would be $2,400 if the car was used 100% for business. If Bonnie uses the actual expense method, what is her deductible travel and transportation expense? A. $5,625 B. $9,900 C. $7,425 D. $6.975 [11] Ron, a single taxpayer, contributed $6.800 to his IRA on November 4, 2022. He is covered under his employer's retirement program. The following is Ron's total income for 2022 Wages Dividends $75,000 4.800 Interest Veterans' educational benefits 8,000 5,000 What is his allowable IRA deduction on his 2022 income tax return? A. $6,000 B. $1,800 C. $0 D. $6,800 (12) Pete, a self-employed CPA, went to Los Angeles for Jets He spent 1 wk analyzing his clents investments in the Westwood area. Laask at a continuing education conference hates to his CPA practice, and Las playing tennis. Pete's roundip airfare was $600) the hotel bill was31.20 meals provided by restaurants under $750 were $450 tuition was$500)and tennis fees were $90. Pete kept tk of all expenses in a dary, but he had documentary substantiation for only the airfare and hotel bil. How much can Pete deduct A $1,700 $2.050 C. $1,850 D. $2.200 urance policy [13] Matt operates a sole proprietorship and fles his retum c for his business effective July 1, Year 1, and paid a premium of $3.20 organs Matt reports his income and expenses on a cash basis. What is Matt's deductible insurance expense for Year 1 a calendar year bes He took out a fre A. $3.600 8. 501 C. $450 D. $900 [14] The expenses from an activity are not deductible if that activity is classified as a hobby Ataxpayer may, howeve establish the presumption that an activity (one not related to horses is a bona fide business engaged in for profit the activity A is profitable at least 2 out of 7 consecutive years. B. Is profitable at least 3 out of 5 consecutive years C. Shows a profit at least 50% of the time. D. is profitable at least 2 out of 5 consecutive years [15] Harvey died on November 7, Year 1, leaving his entire validly elected the alternate valuation date. Hervey's estate basis was $77.500. The stock was distributed to Ken 8 months months following Harvey's death was as follows November 7, Year 1 May 7, Year 2 July 7, Year 2 185.000 Ken's basis in this stockis 92.500 94,500 on estate to t cuced 1.000 shares of Morbid stock for which Harvey bther, Kan Harvey's executor after Harvey's death The FMV of this stock over the A. $77,500 0. $85,000 C. $92.500 D. $94,500 [16] Terry, a taxpayer, purchased stock for $12.000. Later, Terry s Terry's recognized gain or loss? A. $4,000 gain. B. $2,000 gain C. 50 D. $2,000 loss. stock to a relative for.00g what amount is [17] Jim and Margaret Mason, both age 40, are married and filed a joint return for 2022. Both worked, but neither spouse was covered by an employer-sponsored pension plan. The Masons adjusted gross income was 1130.600, including Jim's salary of $129,000. Margaret earned $1200 in wages and $400 in interest from her savings account. What is the amount of the maximum allowable RA contribution and deduction on their 2022 A. $6,000 B. $7,000 C. $14,000 D. $12,000 [18] Jay was given jewelry in the current year. At the time of the gift, the jewelry had a FMV of 20,000 and an adjusted basis to the donor of $5,000. The donor paid a tax of $800 on the gift. Ignoring any annual exclusion, what is Jay's basis in the jewelry? A. $5,600 B. $5,800 C. $20,000 D. $20,800 [19] m owns an apartment building with 10 identical units. He lives in one unit and rents the other re individuals On April 1 of the current year. Jm paid property insuran beginning April 1 of the current year. The total insurance premium was $2.000. Assume Jim is a cash-besis, calendar year taxpayer. What amount is m's rental expense in the curent year for the insurance policy on the apartment building for a 5-year period A. $270 0. $300 C. $1.800 D. $2.000 1201 On June 18, Year 2, Nancy sold 300 shares of A Corporation stack for $20 per share Nancy's cds relating to the stock sold are as follows Date Purchased Number of Shares Adjusted Bash January 3, Year 130 2 June 1. Year 1 25 10 What are the character and the amount of Nancy's gain or les A $250 short-term capital gain and $750 short-term capital loss 0 $250 long-term capital gain and $750 long-term capital los C. $250 short-term capital gain and $750 long-term capital D. $250 long-term capital gain and $750 short-term capital les 121] Which of the following would cause an increase in the basis of an asset A Gift tax paid in respect of property acquired by of B. Casualty loss. C. Section 179 deduction D. Exhaustion, wear and tear, and obsolescence 1221 The Smit on deductible business gitsis A $25 per gift per year B. No m C$25 per recipient per year. D. $25 total per year [23] Robert pays dues of $45,000 annually to the Sea Oyster Country Club Robert used the 130 days in the year for business related activities. Rubert also used the club 120 days in the current year for personal actives What amount of dues can Robert deduct as a business expense for the current year? A $23.400 $11,700 C. 50 D. $45.000 (24) Mr. D purchased an automobile for use in his business for $10,000 in 2015 for the years 2017 through 2021. used the maximum standard mileage rate to figure his car expense deduction. What would Mr. O's car expense deduction be in 2022, using the standard mileage rate, if the auto was driven 20.000 miles for business which was January-June), and the business mileage from prior years is 100,000 m A. $11.500 $11.200 C$11.600 D. $12,100 th [25] On April 1, Year 1, Ms. G, a calendar-year, cash-basis taxpayer, entered into a 3-year lease for a building to be used in her business. The lease is for the period july 1. Year 1, through June 30, Year 4, and provides for annual payments of $6,000. On April 1, Year 1. G paid $18,000 in advance. What is the amount of G's deductible rental expense for Year 1 A $6,000 8. $4.500 C. $18,000 D. $3,000