Vernon is a cash basis taxpayer with a calendar tax year. On October 1, 2018, Vernon entered into a lease to rent a building for use in his business at $3,000 a month. On that day Vernon paid 18 months' rent on the building, a total of $54,000 ($3,000 18 months). How much may Vernon deduct for rent expense on his 2018 tax return?

a.$54,000

b.$0

c.$12,000

d.$36,000

e.None of these choices are correct.

Kate is an accrual basis, calendar-year taxpayer. On November 1, 2018, Kate leased out a building for $4,500 a month. On that day Kate received 7 months rental income on the building, a total of $31,500 ($4,500 7 months). How much income must Kate include on her 2018 tax return as a result of this transaction?

a.$31,500

b.$9,000

c.$4,500

d.$54,000

e.None of these choices are correct.

Which of the common deductions below are allowed for both regular tax purposes and for AMT purposes in 2018?

a.Personal and dependency exemptions

b.The standard deduction

c.State income taxes, property taxes, and all other taxes deducted on Schedule A

d.Mortgage interest from the acquisition of a residence with a loan balance less than $750,000

e.Miscellaneous itemized deductions taken on Schedule A

Melody and Todd are married and have employee wages of $250,000 each in 2018. They have no other income. How much additional 0.9% Medicare tax will Melody and Todd have to pay or receive as a refund when they file their 2018 income tax return?

a.$900 will be refunded with their return.

b.$1,350 will be refunded with their return.

c.$1,350 will be due with their return in addition to amounts withheld.

d.$3,600 will be due with their return in addition to amounts withheld.

Tom, age 13, is claimed as a dependent by his parents. Tom has unearned income of $3,400 and $300 of income from mowing lawns in the neighborhood. If the first $2,550 of Tom's net unearned income is taxed at 10%, what is Tom's 2018 income tax liability?

a.$459

b.$0

c.$265

d.$370

e.None of these choices are correct.

Becky is a cash basis taxpayer with the following transactions during her calendar tax year:

Cash basis revenue	$54,000
Cash basis expenses, except rent	25,000
Rent expense (paid on December 1) for use of a building for 24 months	24,000

What is the amount of Becky's taxable income from her business for this tax year?

a.$28,000

b.$11,000

c.$27,500

d.$7,000 loss

e.None of these choices are correct.

William, a cash-basis sole proprietor, had the following receipts and disbursements for the current year:

Gross receipts	$50,000
Cost of sales	30,000
Other operating expenses	5,000
Personal medical expenses	600

For the current year, what amount should William report as net earnings from self-employment?

a.$13,400

b.$20,000

c.$15,000

d.$14,000

e.None of these choices are correct.