Professional Documents
Culture Documents
MC
1.
(TCO E) For federal tax purposes, the gain form the sale row
of stocks and bonds is classified as
Points :
5
active income.
portfolio income.
CORRECT ANSWER
passive income.
None of the above
Instructor Explanation:
Edit
Question3.
MC
1.
Delete
portfolio income.
active income.
CORRECT ANSWER
passive income.
None of the above
Instructor Explanation:
Edit
Question4.
MC
1.
Delete
row
Points :
5
ordinary course of a
business.
passive activity.
CORRECT
ANSWER
Delete
Question7.
MC
2.
row
Points :
5
CORRECT
ANSWER
MC
2.
Delete
row
Points :
5
MC
2.
Delete
CORRECT
ANSWER
row
Delete
Question12.
MC
3.
(TCO H) Alex and Amy file a joint return for the 2012 tax
year. Their adjusted gross income is $90,000. They had
net investment income of $8,000. In 2012, they had the
following interest expenses.
row
$8,000
$12,000
$20,000
CORRECT ANSWER
$18,000
Instructor
Chapter 8, IRC Sec. 163(d): Investment
Explanation: interest is deducted to the extent of net
MC
3.
Delete
(TCO H) Bob filed a single return for the 2012 tax year.
His adjusted gross income is $80,000. He had net
investment income of $9,000. In 2012, he had the
row
$17,000
$18,500
CORRECT ANSWER
$12,000
$18,000
Instructor
Chapter 8, IRC Sec. 163(d); Investment
Explanation: interest is deducted to the extent of net
MC
3.
Delete
(TCO H) Gary and Tracy file a joint return for the 2012
row
tax year. Their adjusted gross income is $65,000. They
had net investment income of $9,000. In 2012, they had
the following interest expenses.
Personal credit card interest: $3,000
Home mortgage interest: $8,000
Interest paid on qualified education loans:
$2,000
Investment interest (on loans used to buy
stocks): $10,000
What is the interest deduction for Gary
and Tracy for the 2012 tax year?
Points :
5
$19,000
$8,000
$12,000
$18,000
CORRECT ANSWER
Instructor
Chapter 8, IRC Sec. 163(d): Investment
Explanation: interest is deducted to the extent of net
Delete
Question17.
MC
4.
CORRECT
ANSWER
MC
4.
Delete
row
for AGI.
CORRECT
ANSWER
from AGI.
for or from AGI, depending on
the type of expense.
None of the above
Instructor
Explanation:
Edit
Question19.
MC
4.
Delete
Instructor
Explanation:
Edit
Delete
Question22.
MC
5.
row
Points :
5
Charitable contributions
State and local income
taxes
Moving expenses
All of the above
Edit
Question23.
MC
5.
CORRECT
ANSWER
Delete
row
Points :
5
MC
5.
Delete
row
Points :
5
Edit
CORRECT
ANSWER
Delete
Question27.
MC
6.
$90,000
$125,000
$80,000
$70,000
Instructor
Explanation:
Edit
Question28.
MC
6.
CORRECT ANSWER
Delete
$90,000
$135,000
$70,000
CORRECT ANSWER
$80,000
Instructor
Explanation:
MC
6.
Delete
$50,000
CORRECT ANSWER
$105,000
$75,000
$60,000
Instructor
Explanation:
Edit
Delete
Question32.
MC
7.
$350,000
$250,000
row
$225,000
CORRECT ANSWER
$0
Instructor
Explanation:
Edit
Question33.
MC
7.
Delete
$250,000
$240,000
$0
CORRECT ANSWER
$420,000
Instructor
Explanation:
Edit
Question34.
MC
7.
Delete
CORRECT
ANSWER
row
MC
7.
Delete
row
Points :
5
MC
7.
Delete
row
Points :
5
CORRECT
ANSWER
cash is received.
the liability arises.
there is net income to absorb
the expense.
revenue is earned.
Delete
Question39.
MC
8.
row
Points :
5
CORRECT
ANSWER
MC
8.
Delete
CORRECT
ANSWER
MC
8.
Delete
row
Delete
Question44.
MC
9.
row
Points :
5
Attorney
CPA
Bookkeeping service
CORRECT ANSWER
Enrolled agent
Instructor
Explanation:
Edit
Question45.
MC
9.
Delete
CORRECT
ANSWER
row
Public laws
Instructor
Explanation:
Edit
Question46.
MC
9.
Delete
Revenue ruling
Tax court case
Temporary regulation
All of the above
Instructor
Explanation:
Edit
CORRECT ANSWER
Delete
Question49.
MC
10.
CORRECT ANSWER
MC
10.
Delete
row
Points :
5
bonus payments.
payments for services performed
in prior years.
advance payments for services to
be performed in future years.
both bonus payments and
CORRECT
payments for services
ANSWER
performed in prior years.
Instructor
Chapter 6: A deduction for salaries
Explanation:
and wages can include both bonus
payments and payments for services
performed in prior years.
Edit
Question51.
MC
10.
Delete
row
Points :
5
CORRECT
ANSWER
itemized deduction.
long-term capital loss.
ordinary business
deduction.
Instructor
Chapter 6: A nonbusiness bad debt
Explanation:
is deductible for tax purposes as a
short-term capital loss.
Edit
Delete
Question54.
MC
11.
row
Points :
5
No limitation
CORRECT ANSWER
18 months
3 years
6 years
Instructor
Explanation:
Edit
Question55.
MC
11.
Delete
row
Points :
5
Bouncing checks
Fraud
Late filing
All of the above
Instructor
Explanation:
Edit
CORRECT ANSWER
Delete
Question58.
MC
12.
row
$2,000
Interest received on municipal
obligations: $1,000
Alimony paid: $3,600
Child support: $4,800
What is Hanover's adjusted gross income for 2012?
Points :
5
$44,600
$48,400
CORRECT ANSWER
$49,400
$52,000
Instructor
Explanation:
Edit
Question59.
MC
12.
Delete
row
Points :
5
MC
12.
Delete
Delete
Question63.
MC
13.
$1,950
$2,275
$2,600
$2,925
Instructor
Explanation:
CORRECT ANSWER
not taxable.
Edit
Question64.
MC
13.
Delete
row
Points :
5
MC
13.
Delete
CORRECT
ANSWER
Delete
Question68.
MC
14.
$0
$2,100
$4,200
$6,200
Instructor
Explanation:
Edit
Question69.
MC
14.
CORRECT ANSWER
Delete
row
$0.
CORRECT ANSWER
$1,200.
$3,000.
$12,200.
Instructor
Chapter 5: Compensation received
Explanation: under a worker's compensation act for
MC
14.
Delete
$0
$25,000
CORRECT ANSWER
$40,000
$65,000
Instructor
Explanation:
row
Delete
Question73.
MC
15.
row
Points :
5
business losses.
investment losses.
personal losses.
CORRECT
ANSWER
MC
15.
Delete
MC
15.
Delete
row
Points :
5
Delete
Question78.
SA
16.
row
Instructor
Explanation:
Edit
Question79.
SA
16.
Delete
row
Instructor
Explanation:
Edit
Question80.
SA
16.
Delete
row
Instructor
Explanation:
Edit
Delete
Question83.
SA
17.
Instructor
row
Explanation:
Edit
Question84.
SA
17.
Delete
row
Points :
15
Instructor
Explanation:
Edit
Question85.
SA
17.
Delete
Points :
15
Instructor
(a) The payment of a speeding fine
Explanation: related to a trade or business is not
Delete
Question88.
SA
18.
Instructor
The Masons have a realized gain of
Explanation: $620,000 ($720,000 less $100,000).
row
SA
18.
Delete
Instructor
Explanation:
Edit
Question90.
SA
18.
Delete
row
Points :
15
Instructor
(a) The Parkers have owned and used
Explanation: the home for less than two years, but
because they are selling for a jobrelated reason, they may prorate the
exclusion. The amount of exclusion is
$270,833 ($500,000 13 months
divided by 24 months = $270,833).
Because the realized gain is only
$230,000 ($570,000 less $340,000),
they can exclude the whole $230,000
and need not recognize any gain.
(b) The Parkers have a realized gain of
$420,000, of which $270,833 is
excluded and the remaining $149,167
is recognized.
Edit
Delete
Question93.
SA
19.
Instructor
Explanation:
row
Edit
Question94.
SA
19.
Delete
Instructor
Explanation:
Edit
Question95.
SA
19.
Delete
row
Instructor
Explanation:
Edit
Delete
Question98.
SA
20.
Instructor
Explanation:
row
Edit
Question99.
SA
20.
Delete
row
Instructor
Explanation:
Edit
Question100.
SA
20.
Delete
Instructor
Explanation:
Edit
Delete
Question103.
EQ
21.
$ 18,000
4,000
32,000
(35,000)
(5,000)
Instructor
Bearings AGI is $29,000. Passive
Explanation: activity losses (PALs) can only be
row
Edit
Question104.
EQ
21.
Delete
$ 20,000
4,000
32,000
(35,000)
(5,000)
Instructor
Bearings AGI is $31,000. Passive
Explanation: activity losses (PALs) can only be
row
calculated as follows.
Wages
Taxable interest and qualifying dividends
Schedule C trucking business net income
Rental (loss) from residential property
Limited partnership (loss)
Edit
Question105.
EQ
21.
Delete
$ 30,000
4,000
32,000
(35,000)
(5,000)
Instructor
Bearings AGI is $41,000. Passive
Explanation: activity losses (PALs) can only be
row
Wages
Taxable interest and qualifying dividends
Schedule C trucking business net income
Rental (loss) from residential property
Limited partnership (loss)
Edit
Delete
Question108.
EQ
22.
Instructor
Smith can deduct $15,000. Generally,
Explanation: none of the passive losses from real
Edit
Question109.
EQ
22.
Delete
Instructor
Smith can deduct $10,000. Generally,
Explanation: none of the passive losses from real
EQ
22.
Delete
Instructor
Smith can deduct $5,000. Generally,
Explanation: none of the passive losses from real
Edit
Delete
Question113.
EQ
23.
$ 5,000
10,000
20,000
30,000
40,000
Instructor
$130,000 of the NOL is available for
Explanation: Taylor in Year 7. Taylor will carry its
Edit
Question114.
EQ
23.
Delete
$ 5,000
10,000
20,000
30,000
50,000
Instructor
$120,000 of the NOL is available for
Explanation: Taylor in Year 7. Taylor will carry its
Edit
Question115.
EQ
23.
Delete
$ 5,000
10,000
20,000
50,000
50,000
Instructor
$100,000 of the NOL is available for
Explanation: Taylor in Year 7. Taylor will carry its
Delete
Question118.
EQ
24.
Wages
$ 22,000
Unemployment compensation
6,000
Instructor
Randolphs gross income is $32,000.
Explanation: Each item listed here is included in
Wages
Unemployment compensation
Pension distribution (100%
taxable)
Total
Edit
Question119.
EQ
24.
Delete
Wages
$ 25,000
Unemployment compensation
6,000
Instructor
Randolphs gross income is $35,000.
Explanation: Each item listed here is included in
Wages
Unemployment compensation
Pension distribution (100%
taxable)
Total
Edit
Question120.
EQ
24.
Delete
Wages
$ 30,000
Unemployment compensation
6,000
Instructor
Randolphs gross income is $40,000.
Explanation: Each item listed here is included in
Wages
Unemployment compensation
Pension distribution (100%
taxable)
Total
Edit
Delete
Question123.
SA
25.
Instructor
Explanation:
Edit
Question124.
EQ
25.
Chapter 10
Basis per share of stock purchased
on April 18, 2012: $7 ($210 30)
Basis per share of stock purchased
on September 29, 2012: $10 ($900
90)
Sale on November 28, 2012: 30
shares (all of 4-18-12 purchase):
$210
18 shares (18 of 9-29-12 purchase):
$180
Basis under FIFO: $390
Selling price: $576
Less: Basis $390
Gain: $186
Sale on December 8, 2012: Selling
price $100
Less: Basis (25 $10) $250
Loss: ($150)
Combining the two sales: Gain
$186
Loss: ($150)
Net gain: $36
Delete
Instructor
Explanation:
Chapter 10
Basis per share of stock purchased
on April 30, 2012: $7 ($210 30)
Basis per share of stock purchased
on September 1, 2012: $10 ($900
90)
Sale on November 8, 2012: 30
shares (all of 4-30-12 purchase):
$210
EQ
25.
Delete
Instructor
Explanation:
Edit
Delete
Chapter 10
Basis per share of stock purchased
on May 18, 2012: $7 ($210 30)
Basis per share of stock purchased
on October 29, 2012: $10 ($900
90)
Sale on November 28, 2012: 30
shares (all of 5-18-12 purchase):
$210
18 shares (18 of 10-29-12
purchase): $180
Basis under FIFO: $390
Selling price: $576
Less: Basis $390
Gain: $186
Sale on December 8, 2012: Selling
price $150
Less: Basis (25 $10) $250
Loss: ($100)
Combining the two sales: Gain
$186
Loss: ($100)
Net gain: $86