ACCT 324 ENTIRE COURSE


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ACCT 324 ENTIRE COURSE

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ACCT 324 ENTIRE COURSE

 

 

 

ACCT 324 Midterm

 

  1. (TCO 9) Which of the following is NOT a characteristic of the audit process?
  2. (TCO 9) A characteristic of fraud penalties is:
  3. (TCO 1) The Internal Revenue Code was codified for the first time in what year?
  4. (TCO 1) Subchapter S covers which specific area of tax law?
  5. (TCO 11) Which of the following taxpayers may file as a head of household in 2008?
  6. (TCO 11) Arnold is married to Sybil, who abandoned him in 2008. He has NOT seen or communicated with her since April of that year. He maintains a household in which their son, Evans, lives. Evans is age 25 and earns over $20,000 each year. For tax year 2010, Arnold's filing status is:
  7. (TCO 7) Kathy operates a gym. She sells memberships that entitle the member to use the facilities at any time. A one-year membership costs $360 ($360/12 = $30 per month); a two-year membership costs $600 ($600/24 = $25 per month). Cash payment is required at the beginning of the membership period. On July 1, 2009, Kathy sold a one-year membership and a two-year membership
  8. (TCO 7) With respect to income from services, which of the following is true?
  9. (TCO 3) Ridge is the manager of a motel. As a condition of his employment, Ridge is required to live in a room on the premises so that he would be there in case of emergencies. Ridge considered this a fringe benefit, since he would otherwise be required to pay $600 per month for rent. The room that Ridge occupied normally rented for $60 per night, or $1,500 per month. On the average, 90% of the motel rooms were occupied. As a result of this rent-free use of a room, Ridge is required to include in gross income:
  10. (TCO 3) Adam repairs power lines for the Egret Utilities Company. He is generally working on a power line during the lunch hour. He must eat when and where he can and still get his work done. He usually purchases something at a convenience store and eats in his truck. Egret reimburses Adam for the cost of his meals
  11. (TCO 10) Hans purchased a new passenger automobile on August 17, 2010 for $40,000. During the year, the car was used 40% for business and 60% for personal use. Determine his cost recovery deduction for the car for 2010.
  12. (TCO 10) Cory incurred and paid the following expenses:

Tax return preparation fee

$600

Moving expenses

$2,000

Investment expenses

$500

Expenses associated with rental property

$1,500

Interest expense associated with loan to finance tax-exempt bonds

$400

  1. (TCO 10) Sarah incurred the following expenses for her dependent son during the current year:

Payment of principal on son's automobile loan

$5,000

Interest on above loan

$2,000

Payment of son's property taxes

$1,200

Payment of principal on son's personal residence loan

$1,500

Payment of interest on son's personal residence loan

$8,000

How much may Sarah deduct in computing her itemized deductions?

  1. (TCO 10) Danielle owns a vacation cottage. During the current year, she rented it for $1,500 for 48 days, and lived in it for 12 days. How would any expenses be accounted for?
  2. (TCO 3) During the year, Rick had the following insured personal casualty losses (arising from one casualty). Rick also had $18,000 AGI for the year.

Asset

Adjusted 
Basis

Fair Market 
Value (Before)

Fair Market 
Value (After)

Insurance 
Recovery

A

$500

$700

$300

$150

B

3,000

2,000

-0-

500

C

700

900

-0-

200

Rick's casualty loss deduction is:

  1. (TCO 3) John had adjusted gross income of $60,000. During the year, his personal use summer home was damaged by a fire. Pertinent data with respect to the home follows:

Cost basis

$250,000

Value before the fire

$400,000

Value after the fire


$100,000

Insurance recovery

$270,000


John had an accident with his personal use car. As a result of the accident, John was cited with reckless driving and willful negligence. Pertinent data with respect to the car follows:

Cost basis

$80,000

Value before the accident

$6,000

Value after the accident

$20,000

Insurance recovery

$0

What is John's deductible casualty loss?

  1. (TCO 3) Hannah makes the following charitable donations in the current year:

 

Basis

Fair Market
Value

Inventory held for resale in Hannah's business 
(a sole proprietorship)

$8,000

$7,200

Stock in HBM, Inc., held as an investment
(acquired four years ago)

$16,000

$40,000

Baseball card collection held as an investment 
(acquired six years ago)

$4,000

$20,000


The HBM stock and the inventory were given to Hannah's church, and the baseball card collection was given to the United Way. Both donees promptly sold the property for the stated fair market value.

Disregarding percentage limitations, Hannah's current charitable contribution deduction is:

  1. (TCO 3) Karen, a calendar year taxpayer, made the following donations to qualified charitable organizations in the current year:

 

Basis

Fair Market Value

Cash donation to Midwest State University

$30,000

$ 30,000

Unimproved land to the city of Terre Haute, Indiana

$70,000

$210,000

The land had been held as an investment and was acquired 4 years ago. Shortly after receipt, the city of Terre Haute sold the land for $210,000. Karen's AGI is $450,000.

  1. (TCO 3) Josh has investments in two passive activities. Activity A, acquired three years ago, produces income in the current year of $60,000. Activity B, acquired last year, produces a loss of $100,000 in the current year. At the beginning of this year, Josh's at-risk amounts in Activities A and B are $10,000 and $100,000, respectively. What is the amount of Josh's suspended passive loss with respect to these activities at the end of the current year?
  2. (TCO 3) Sandra acquired a passive activity three years ago. Until last year, the activity was profitable and her at-risk amount was $300,000. Last year, the activity produced a loss of $100,000, and in the current year, the loss is $50,000. Assuming Sandra has received no passive income in the current or prior years, her suspended passive loss from the activity is:
  3. (TCO 3) Vic's at-risk amount in a passive activity is $200,000 at the beginning of the current year. His current loss from the activity is $80,000. Vic had no passive activity income during the year. At the end of the current year:
  4. (TCO 2) The installment method applies to which of the following sales with payments being made in the year following the year of sale?
  5. (TCO 2) In 2009, Helen sold property and reported her gain by the installment method. Her basis in the property was $150,000 ($250,000 cost less $100,000 of depreciation). Helen sold the property for $375,000, with $75,000 due on the date of the sale and $300,000 (plus interest at the federal rate) due in 2010. Helen's recognized installment sale gain in 2010 is:
  6. (TCO 2) Pedro, NOT a dealer, sold real property that he owned with an adjusted basis of $60,000 and encumbered by a mortgage for $28,000 to Pat in 2008. The terms of the sale required Pat to pay $14,000 cash, assume the $28,000 mortgage, and give Pedro eleven notes for $6,000 each (plus interest at the federal rate). The first note was payable two years from the date of sale, and each succeeding note became due at two-year intervals. Pedro did NOT elect out of the installment method for reporting the transaction. If Pat pays the 2011 note as promised, what is the recognized gain to Pedro in 2010 (exclusive of interest)?
  7. (TCO 2) Both economic and social considerations can be used to justify:
  8. (TCO 3) Marge's auto, which is used for business purposes only, is totally destroyed by a fire. The fair market value of the auto was $8,000 at the time of the fire and the adjusted basis was $10,000. Calculate the loss, and determine whether it is a deduction for or a deduction from AGI.
  9. (TCO 1) In 2010, David had the following transactions:

Salary

$75,000

Capital loss from a stock investment

($6,000)

Moving expense to change jobs

($12,500)

Received repayment of $9,000 loan he made to a friend in 2007 (also interest of $900)

$9,900

Property taxes on personal residence

$1,500

Based on the information given above, determine David's AGI. Be sure to show your work.

 

 

ACCT 324 Midterm 3

 

  1. (TCO 9) Trent files his tax return 35 days after the due date. Along with the return, Trent remits a check for $8,000, which is the balance of the tax owed.

Disregarding the interest element, Trent's total failure to file and to pay penalties are:

  1. (TCO 9) A characteristic of fraud penalties is:
  2. (TCO 1) Tax bills are handled by which committee in the U.S. Senate?
  3. (TCO 1) Which statement is false with respect to tax treaties?
  4. (TCO 11) Emily, whose husband died in December 2008, maintains a household in which her dependent daughter lives. Which (if any) of the following is her filing status for the tax year 2008? (Note: Emily is the executor of her husband's estate.)
  5. (TCO 11) During the year, Kim sold the following assets: business auto for a $1,000 loss, stock investment for a $1,000 loss, and pleasure yacht for a $1,000 loss. Presuming adequate income, how much of these losses may Kim claim?
  6. TCO 7) Orange Cable TV Company, an accrual basis taxpayer, allows its customers to pay by the year in advance ($350 per year), or two years in advance ($680). In September 2008, the company collected the following amounts applicable to future services:

October 2008-September 2010 services 
(two-year contracts)

$72,000

October 2008-September 2009 services 
(one-year contracts)

$64,000

Total

$136,000


As a result of the above, Orange Cable should report as gross income

  1. (TCO 7) With respect to the prepaid income from services, which of the following is true?
  2. (TCO 3) Section 119 excludes the value of meals from the employees' gross income:
  3. (TCO 3) Under the Swan Company's cafeteria plan, all full-time employees are allowed to select any combination of the benefits below, but the total received by the employee CANNOT exceed $8,000 a year.

  4. Group medical and hospitalization insurance for the employee, $3,600 a year.
    II. Group medical and hospitalization insurance for the employee's spouse and children, $1,200 a year.
    III. Childcare payments, actual cost, but not more than $4,800 a year.
    IV. Cash required to bring the total of benefits and cash to $8,000.

    Which of the following statements is true?
  5. (TCO 10) Hans purchased a new passenger automobile on August 17, 2010 for $40,000. During the year, the car was used 40% for business and 60% for personal use. Determine his cost recovery deduction for the car for 2010
  6. (TCO 10) Bob and April own a house at the beach. The house was rented to unrelated parties for 8 weeks during the year. April and the children used the house 12 days for their vacation during the year. After properly dividing the expenses between rental and personal use, it was determined that a loss was incurred as follows:

Gross rental income

 

$4,000

Less: Mortgage interest and property taxes

$3,500

 

Other allocated expenses

2,000

(5,500)

Net rental loss

 

($1,500)


What is the correct treatment of the rental income and expenses on Bob and April's joint income tax return for the current year, assuming the IRS approach is used, if applicable?

  1. (TCO 10) On May 2, 2010, Karen places in service a new sports utility vehicle that costs $70,000 and has a gross vehicle weight of 6,300 lbs. The vehicle is used 40% for business and 60% for personal use. Determine the cost recovery deduction for 2010
  2. (TCO 10) Danielle owns a vacation cottage. During the current year, she rented it for $1,500 for 48 days, and lived in it for 12 days. How would any expenses be accounted for?
  3. (TCO 3) Norm's car, which he uses 100% for personal purposes, was completely destroyed in an accident. The car's adjusted basis at the time of the accident was $13,000. Its fair market value was $11,500. The car was covered by a $2,000 deductible insurance policy. Norm did NOT file a claim against the insurance policy because of a fear that reporting the accident would result in a substantial increase in his insurance rates. His adjusted gross income was $14,000 (before considering the loss). What is Norm's deductible loss?
  4. (TCO 3) During the year, Grant's personal residence was damaged by fire. Grant was insured for 90% of his actual loss, and he received the insurance settlement. Grant had adjusted gross income, before considering the casualty item, of $30,000. Pertinent data with respect to the residence follows:

Cost basis

$170,000

Value before casualty

$250,000

Value after casualty

$150,000


What is Grant's allowable casualty loss deduction?

  1. (TCO 3) Hannah makes the following charitable donations in the current year:

 

Basis

Fair Market
Value

Inventory held for resale in Hannah's business 
(a sole proprietorship)

$8,000

$7,200

Stock in HBM, Inc., held as an investment
(acquired four years ago)

$16,000

$40,000

Baseball card collection held as an investment 
(acquired six years ago)

$4,000

$20,000


The HBM stock and the inventory were given to Hannah's church, and the baseball card collection was given to the United Way. Both donees promptly sold the property for the stated fair market value. 

Disregarding percentage limitations, Hannah's current charitable contribution deduction is:

  1. (TCO 3) Zeke made the following donations to qualified charitable organizations during the year:

 

Basis

Fair Market 
Value

Used clothing (all acquired at least 18 months ago) of taxpayer and his family

$2,350

$675

Stock in ABC, Inc., held as an investment for 15 months

$15,000

$12,875

Stock in MNO, Inc., held as an investment for 11 months

$12,000

$20,000

Real estate held as an investment for two years

$20,000

$35,000


The used clothing was donated to the Salvation Army; the other items of property were donated to Eastern State University. Both are qualified charitable organizations. 

Disregarding percentage limitations, Zeke's current charitable contribution deduction is:

  1. (TCO 3) Josh has investments in two passive activities. Activity A, acquired three years ago, produces income in the current year of $60,000. Activity B, acquired last year, produces a loss of $100,000 in the current year. At the beginning of this year, Josh's at-risk amounts in Activities A and B are $10,000 and $100,000, respectively. What is the amount of Josh's suspended passive loss with respect to these activities at the end of the current year?
  2. (TCO 3) Several years ago, Joy acquired a passive activity. Until 2006, the activity was profitable. Joy's at-risk amount at the beginning of 2006 was $250,000. The activity produced losses of $100,000 in 2006, $80,000 in 2007, and $90,000 in 2008. During the same period, no passive income was recognized. How much is suspended under the at-risk rules and the passive loss rules at the beginning of 2009?
  3. (TCO 3) Vic's at-risk amount in a passive activity is $200,000 at the beginning of the current year. His current loss from the activity is $80,000. Vic had no passive activity income during the year. At the end of the current year:
  4. (TCO 2) The accrual basis taxpayer sold land for $100,000 on December 31, 2009. He did NOT collect the $100,000 until January 2, 2010. The land was held as an investment.
  5. (TCO 2) Hal sold land held as an investment with a fair market value of $100,000 for $36,000 cash and a note for $64,000 that was due in two years. The note bore interest of 11% when the applicable federal rate was 7%. Hal's cost of the land was $40,000. Because of the buyer's good credit record and the high interest rate on the note, Hal thought the fair market value of the note was at least $74,000.
  6. (TCO 2) Pedro, NOT a dealer, sold real property that he owned with an adjusted basis of $60,000 and encumbered by a mortgage for $28,000 to Pat in 2008. The terms of the sale required Pat to pay $14,000 cash, assume the $28,000 mortgage, and give Pedro eleven notes for $6,000 each (plus interest at the federal rate). The first note was payable two years from the date of sale, and each succeeding note became due at two-year intervals. Pedro did NOT elect out of the installment method for reporting the transaction. If Pat pays the 2011 note as promised, what is the recognized gain to Pedro in 2010 (exclusive of interest)?
  7. (TCO 2) Social considerations can be used to justify:
  8. (TCO 3) Joe's automobile, which was used only for business purposes, was damaged in an accident. At the date of the accident, the fair market value of the automobile was $13,000 and its adjusted basis was $7,000. After the accident, the automobile was appraised at $4,000. Calculate Joe's loss. Is it a for or fromAGI deduction?
  9. (TCO 1) Elaine provides more than half of the support for her son James, who does NOT live with her. James is 26 and is a full-time law student. He earns $2,000 from a part-time job. He has a $11,000 scholarship covering his tuition. May Elaine claim James as a dependent? Fully explain you answer.

 

 

ACCT 324 Week 2 You Decide Assignment

 

 

ACCT 324 Week 3 Homework Assignment Chapter 10 and 12

 

 

ACCT 324 Week 4 Homework

 

Chapter 9: Problem #47

Christine is a full-time teacher of the fourth grade at Vireo Academy. During the current year, she spends $1,400 for classroom supplies. On the submission of adequate substantiation, Vireo reimburses her for $500 of these expenses—the maximum reimbursement allowed for supplies under school policy. [The reimbursement is not shown as income (Box 1) of Form W-2 given to Christine by Vireo.] What are the income tax consequences of the $1,400 if Christine:

Chapter 10: Problem #26

Paul, age 62, suffers from emphysema and severe allergies and, upon the recommendation of his physician, has a dust elimination system installed in his personal residence. In connection with the system, Paul incurs and pays the following amounts during 2013:

Doctor and hospital bills $ 2,500

Dust elimination system 10,000

Increase in utility bills due to the system 450

Cost of certified appraisal 300

  • Chapter 11: Problem #40

Ray acquired an activity several years ago, and in the current year, it generates a loss of $50,000. Ray has AGI of $140,000 before considering the loss from the activity. If the activity is a bakery and Ray is not a material participant, what is his AGI?

 

 

ACCT 324 Week 4 Homework

 

 

Chapter 9: Problem #47

Christine is a full-time teacher of the fourth grade at Vireo Academy. During the current year, she spends $1,400 for classroom supplies. On the submission of adequate substantiation, Vireo reimburses her for $500 of these expenses—the maximum reimbursement allowed for supplies under school policy. [The reimbursement is not shown as income (Box 1) of Form W-2 given to Christine by Vireo.] What are the income tax consequences of the $1,400 if Christine:

Chapter 10: Problem #26

Paul, age 62, suffers from emphysema and severe allergies and, upon the recommendation of his physician, has a dust elimination system installed in his personal residence. In connection with the system, Paul incurs and pays the following amounts during 2013:

Doctor and hospital bills $ 2,500

Dust elimination system 10,000

Increase in utility bills due to the system 450

Cost of certified appraisal 300

  • Chapter 11: Problem #40

Ray acquired an activity several years ago, and in the current year, it generates a loss of $50,000. Ray has AGI of $140,000 before considering the loss from the activity. If the activity is a bakery and Ray is not a material participant, what is his AGI?

 

 

ACCT 324 Week 5 Homework

 

 

Chapter 12 Discussion #1

LO.1 Priscilla was recently promoted and received a substantial raise. She talks to her tax adviser about the potential tax ramifications. After making some projections, her adviser welcomes her to the AMT club. Priscilla believes that it is unfair that she must pay more than the regular income tax, as she is a “HENRY” (high earner not rich yet) with substantia] college-related debts. Explain to Priscilla the purpose of the AMT and why it applies to her.

Chapter 12 Problem #31

LO.2 Use the following data to calculate Chiara's AMT base in 2013

Chapter 13 Problem #35

Which of the following individuals qualify for the earned income credit for 2013?

 

 

ACCT 324 Week 6 Homework

 

Chapter 14

  1. LO.1, 2 Which of the following results in a recognized gain or loss?
  2. Adam sells his personal residence (adjusted basis of $150,000) for $100,000.
  3. Carl's personal residence (adjusted basis of $65,000) is condemned by the city. He receives condemnation proceeds of $55,000.
  4. Olga's land is worth $40,000 at the end of the year. She had purchased the land six months earlier for $25,000.

Chapter 15

  1. LO.4 Wesley, who is single, listed his personal residence with a real estate agent on March 3, 2013, at a price of $390,000. He rejected several offers in the $350,000 range during the summer. Finally, on August 16, 2013, he and the purchaser signed a contract to sell for $363,000. The sale (i.e., closing) took place on September 7, 2013. The closing statement showed the following disbursements:

 

 

ACCT 324 Week 7 Course Project

 

 

ACCT 324 Week 8 Final Exam

 

Question 1.1. (TCOs 2 & 3) 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: (Points : 5)

Question 2.2. (TCOs 3, 4, 5, & 7) In the current year, Galaxy Corporation, a closely held C corporation that is not a personal service corporation, has $80,000 of passive losses, $60,000 of active business income, and $10,000 of portfolio income. How much of the passive loss may Galaxy deduct in the current year? (Points : 5)

Question 3.3. (TCOs 3, 4, 5, & 7) Dorothy holds two jobs. Her main job is with Eggplant Corporation, and her part-time job is with Carrot Company. On a typical workday, she drives her car as follows: home to Eggplant, Eggplant to Carrot, and Carrot to home. Applicable mileage is as follows

Question 4.4. (TCOs 3, 4, 5, & 7) Carrie owns a mineral property that had a basis of $15,000 at the beginning of the year. The property qualifies for a 22% depletion rate. Gross income from the property was $150,000, and net income before the percentage depletion deduction was $100,000. What is Carrie's tax preference for excess depletion? (Points : 5)

Question 5.5. (TCOs 3, 4, 5, & 7) During the past two years, through extensive advertising and improved customer relations, Beech Corporation estimated that it had developed customer goodwill worth $100,000. For the current year, determine the amount of goodwill Beech Corporation may amortize. (Points : 5)

Question 6.6. (TCOs 3, 4, 5, & 7) Damien, not a dealer in real estate, sold real estate with a basis of $250,000 for $500,000 cash, a note for $250,000, and the buyer assumed Damien's mortgage on the property of $125,000. During the year, the purchaser paid Damien $30,000 principal and $72,000 interest on the note and paid $6,000 principal and $18,000 interest on the mortgage he assumed. The contract price for the above transaction is what amount? (Points : 5)

Question 7.7. (TCOs 3, 4, 5, & 7) Which of the following is not an itemized deduction allowed for AMT purposes? (Points : 5)

Question 8.8. (TCOs 3, 4, 5, & 7) Alex works as an auditor for a major CPA firm. During the months of August and September of each year, he is permanently assigned to the team auditing of Hummingbird Corporation. As a result, every day he drives from his home to Hummingbird and returns home after work. Mileage is as follows:

Question 9.9. (TCOs 7, 8, & 9) Matt and Shanekwa, ages 45 and 44, respectively, file a joint tax return for 2012. 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, 2012, earned $6,000, which was 45% of her total support during 2012. 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 2012 income tax return? (Points : 5)

Question 10.10. (TCOs 2, 8, & 9) Shaquille operates a drug-running operation and incurred the following expenses

Question 11.11. (TCOs 2, 8, & 9) During 2012, Robin sold the following assets: business equipment for a $6,000 loss, stock investment for a $15,000 loss, and her principal residence for a $14,000 loss. Presuming adequate income, how much of these losses may Robin claim on her 2012 return? (Points : 5)

Question 12.12. (TCOs 2 & 11) Nicholas loaned Lyle (a friend) $30,000 in 2011 with the agreement that the loan would be repaid in two years. In 2012, Lyle filed for bankruptcy and Nicholas learned that he could expect to receive $0.50 on the dollar. In 2012, 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)

Question 13.13. (TCOs 2 & 11) Kelsey, a stock broker, owns a separate business in which he participates in the current year. He has one employee who works part-time in the business. Which of the following statements is correct? (Points : 5)

Question 14.14. (TCOs 2 & 11) During the year, Clara took a trip from Chicago to Rome. She was away from home for 20 days. She spent 6 days vacationing and 14 days on business (including the 3 travel days). Her expenses are as follows:

Question 15.15. (TCOs 2 & 11) In January, Charlie sold stock with a cost basis of $40,000 to his brother Allen for $30,000, the fair market value of the stock on the date of sale. Five months later, Allen sold the same stock through his broker for $45,000. What is the tax effect of these transactions? (Points : 5)

Question 1.1. (TCO 1) Which of the following is a judicial source of the tax law?

Question 2.2. (TCOs 2, 3, 6, 8, 9, & 10) Which, if any, of the following is a deduction from AGI

Question 3.3. (TCOs 2, 3, 6, 8, 9, & 10) Sergio lives in an apartment building and has a 2-year lease that began 13 months ago. His landlord is willing to pay Sergio $2,000 to vacate the apartment immediately. The landlord wants to sell the building to a buyer who will convert the building into condominiums. Sergio's lease on the apartment is a capital asset, but has no tax basis. The $2,000 Sergio will receive if he accepts the landlord's offer will be

Question 4.4. (TCOs 2, 3, 6, 8, 9, & 10) Rockwell purchased a tract of land for $125,000 in 2004 when he heard that a new highway was going to be constructed through the property and that the land would soon be worth $300,000. Highway engineers surveyed the property and indicated that he would probably get $200,000. The highway project was abandoned in 2012, and the value of the land fell to $80,000. What is the amount of loss Rockwell can claim in 2012

Question 5.5. (TCOs 2, 3, 6, 8, 9, & 10) Donald has a $20,000 disallowed loss from a sale of property to a related taxpayer. The property was sold for $70,000. Donald uses the $70,000 to purchase different property than the property that was sold. Which of the statements below is correct concerning the property Donald purchased

Question 6.6. (TCOs 2, 3, 6, 8, 9, & 10) A taxpayer who loses in the U.S. Court of Federal Claims may appeal directly to the

Question 7.7. (TCO 6) Eighteen-year residential real property owned by an individual has accumulated accelerated depreciation of $275,000 at January 1, 2012. If depreciation had been computed under the straight-line method, accumulated depreciation would be $200,000. The property is sold on January 1, 2012 with a recognized gain of $300,000. What is the amount of depreciation recapture

Question 8.8. (TCO 6) Opal, Inc. owns a delivery truck that initially cost $40,000. After a depreciation of $15,000 had been deducted, the truck was traded-in on a new truck that cost $50,000. Opal was required to pay the car dealer $10,000 in cash. What is Opal's basis for the new truck

Question 9.9. (TCO 6) Judy exchanges a rental house at the beach with an adjusted basis of $165,000 and a fair market value of $150,000 for a rental house at the mountains with a fair market value of $100,000 and cash of $50,000. What is the recognized gain or loss

Question 10.10. (TCO 6) Terron gives her son stock with a basis in her hands of $225,000 and a fair market value of $180,000. No gift tax is paid. Her son subsequently sells the stock for $190,000. What is his recognized gain or loss

Question 11.11. (TCOs 2, 6, & 11) Juaquin owns five activities. He elects not to group them together as a single activity under the appropriate economic unit standard. He participates for 140 hours in Activity A, 165 hours in Activity B, 196 hours in Activity C, 100 hours in Activity D, and 85 hours in Activity E. Which of the following statements is CORRECT

Question 1.1. (TCOs 1, 2, 4, & 7) Dabney and Nancy are married, both gainfully employed, and have two children who are 3 and 6 years old. Dabney's salary is $35,000 while Nancy's salary is $40,000. During the year, they spend $7,000 for child care expenses that are required so both of them can work outside of the home. Calculate the credit for child and dependent care expenses

Question 2.2. (TCOs 1, 3, & 10) In 2012, Walter had the following transactions

Question 3.3. (TCOs 9 & 12) 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

Question 4.4. (TCOs 1 & 5) 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

Question 1.1. (TCOs 1, 6, 8, & 11) Faith inherited an undivided interest in a parcel of land from her father on February 15, 2012. Her father had purchased the land on August 25,1965, and his basis for the land was $325,000. The fair market value of the land is $1,250,000 on the date of her father's death and is $1,100,000 six months later. The executor elects the alternate valuation date. Faith has nine brothers and sisters and each inherited a one-tenth interest

Question 2.2. (TCOs 2, 3, & 11) Discuss the computation of percentage depletion

Question 3.3. (TCOs 1, 2, 3, & 11) Travel status requires that the taxpayer be away from home overnight. I) What does away from home overnight mean? II) What tax advantages result from being in travel status

Question 4.4. (TCOs 1, 2, 3, & 11) 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

 

 

ACCT 324 Final Exam

 

Question 1.1. (TCOs 2 & 3) 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: (Points : 5)

Question 2.2. (TCOs 3, 4, 5, & 7) In the current year, Galaxy Corporation, a closely held C corporation that is not a personal service corporation, has $80,000 of passive losses, $60,000 of active business income, and $10,000 of portfolio income. How much of the passive loss may Galaxy deduct in the current year? (Points : 5)

Question 3.3. (TCOs 3, 4, 5, & 7) Dorothy holds two jobs. Her main job is with Eggplant Corporation, and her part-time job is with Carrot Company. On a typical workday, she drives her car as follows: home to Eggplant, Eggplant to Carrot, and Carrot to home. Applicable mileage is as follows

Question 4.4. (TCOs 3, 4, 5, & 7) Carrie owns a mineral property that had a basis of $15,000 at the beginning of the year. The property qualifies for a 22% depletion rate. Gross income from the property was $150,000, and net income before the percentage depletion deduction was $100,000. What is Carrie's tax preference for excess depletion? (Points : 5)

Question 5.5. (TCOs 3, 4, 5, & 7) During the past two years, through extensive advertising and improved customer relations, Beech Corporation estimated that it had developed customer goodwill worth $100,000. For the current year, determine the amount of goodwill Beech Corporation may amortize. (Points : 5)

Question 6.6. (TCOs 3, 4, 5, & 7) Damien, not a dealer in real estate, sold real estate with a basis of $250,000 for $500,000 cash, a note for $250,000, and the buyer assumed Damien's mortgage on the property of $125,000. During the year, the purchaser paid Damien $30,000 principal and $72,000 interest on the note and paid $6,000 principal and $18,000 interest on the mortgage he assumed. The contract price for the above transaction is what amount? (Points : 5)

Question 7.7. (TCOs 3, 4, 5, & 7) Which of the following is not an itemized deduction allowed for AMT purposes? (Points : 5)

Question 8.8. (TCOs 3, 4, 5, & 7) Alex works as an auditor for a major CPA firm. During the months of August and September of each year, he is permanently assigned to the team auditing of Hummingbird Corporation. As a result, every day he drives from his home to Hummingbird and returns home after work. Mileage is as follows: 

Question 9.9. (TCOs 7, 8, & 9) Matt and Shanekwa, ages 45 and 44, respectively, file a joint tax return for 2012. 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, 2012, earned $6,000, which was 45% of her total support during 2012. 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 2012 income tax return? (Points : 5)

Question 10.10. (TCOs 2, 8, & 9) Shaquille operates a drug-running operation and incurred the following expenses

Question 11.11. (TCOs 2, 8, & 9) During 2012, Robin sold the following assets: business equipment for a $6,000 loss, stock investment for a $15,000 loss, and her principal residence for a $14,000 loss. Presuming adequate income, how much of these losses may Robin claim on her 2012 return? (Points : 5)

Question 12.12. (TCOs 2 & 11) Nicholas loaned Lyle (a friend) $30,000 in 2011 with the agreement that the loan would be repaid in two years. In 2012, Lyle filed for bankruptcy and Nicholas learned that he could expect to receive $0.50 on the dollar. In 2012, 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)

Question 13.13. (TCOs 2 & 11) Kelsey, a stock broker, owns a separate business in which he participates in the current year. He has one employee who works part-time in the business. Which of the following statements is correct? (Points : 5)

Question 14.14. (TCOs 2 & 11) During the year, Clara took a trip from Chicago to Rome. She was away from home for 20 days. She spent 6 days vacationing and 14 days on business (including the 3 travel days). Her expenses are as follows: 

Question 15.15. (TCOs 2 & 11) In January, Charlie sold stock with a cost basis of $40,000 to his brother Allen for $30,000, the fair market value of the stock on the date of sale. Five months later, Allen sold the same stock through his broker for $45,000. What is the tax effect of these transactions? (Points : 5)

Question 1.1. (TCO 1) Which of the following is a judicial source of the tax law?

Question 2.2. (TCOs 2, 3, 6, 8, 9, & 10) Which, if any, of the following is a deduction from AGI

Question 3.3. (TCOs 2, 3, 6, 8, 9, & 10) Sergio lives in an apartment building and has a 2-year lease that began 13 months ago. His landlord is willing to pay Sergio $2,000 to vacate the apartment immediately. The landlord wants to sell the building to a buyer who will convert the building into condominiums. Sergio's lease on the apartment is a capital asset, but has no tax basis. The $2,000 Sergio will receive if he accepts the landlord's offer will be

Question 4.4. (TCOs 2, 3, 6, 8, 9, & 10) Rockwell purchased a tract of land for $125,000 in 2004 when he heard that a new highway was going to be constructed through the property and that the land would soon be worth $300,000. Highway engineers surveyed the property and indicated that he would probably get $200,000. The highway project was abandoned in 2012, and the value of the land fell to $80,000. What is the amount of loss Rockwell can claim in 2012

Question 5.5. (TCOs 2, 3, 6, 8, 9, & 10) Donald has a $20,000 disallowed loss from a sale of property to a related taxpayer. The property was sold for $70,000. Donald uses the $70,000 to purchase different property than the property that was sold. Which of the statements below is correct concerning the property Donald purchased

Question 6.6. (TCOs 2, 3, 6, 8, 9, & 10) A taxpayer who loses in the U.S. Court of Federal Claims may appeal directly to the

Question 7.7. (TCO 6) Eighteen-year residential real property owned by an individual has accumulated accelerated depreciation of $275,000 at January 1, 2012. If depreciation had been computed under the straight-line method, accumulated depreciation would be $200,000. The property is sold on January 1, 2012 with a recognized gain of $300,000. What is the amount of depreciation recapture

Question 8.8. (TCO 6) Opal, Inc. owns a delivery truck that initially cost $40,000. After a depreciation of $15,000 had been deducted, the truck was traded-in on a new truck that cost $50,000. Opal was required to pay the car dealer $10,000 in cash. What is Opal's basis for the new truck

Question 9.9. (TCO 6) Judy exchanges a rental house at the beach with an adjusted basis of $165,000 and a fair market value of $150,000 for a rental house at the mountains with a fair market value of $100,000 and cash of $50,000. What is the recognized gain or loss

Question 10.10. (TCO 6) Terron gives her son stock with a basis in her hands of $225,000 and a fair market value of $180,000. No gift tax is paid. Her son subsequently sells the stock for $190,000. What is his recognized gain or loss

Question 11.11. (TCOs 2, 6, & 11) Juaquin owns five activities. He elects not to group them together as a single activity under the appropriate economic unit standard. He participates for 140 hours in Activity A, 165 hours in Activity B, 196 hours in Activity C, 100 hours in Activity D, and 85 hours in Activity E. Which of the following statements is CORRECT

Question 1.1. (TCOs 1, 2, 4, & 7) Dabney and Nancy are married, both gainfully employed, and have two children who are 3 and 6 years old. Dabney's salary is $35,000 while Nancy's salary is $40,000. During the year, they spend $7,000 for child care expenses that are required so both of them can work outside of the home. Calculate the credit for child and dependent care expenses

Question 2.2. (TCOs 1, 3, & 10) In 2012, Walter had the following transactions

Question 3.3. (TCOs 9 & 12) 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

Question 4.4. (TCOs 1 & 5) 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

Question 1.1. (TCOs 1, 6, 8, & 11) Faith inherited an undivided interest in a parcel of land from her father on February 15, 2012. Her father had purchased the land on August 25,1965, and his basis for the land was $325,000. The fair market value of the land is $1,250,000 on the date of her father's death and is $1,100,000 six months later. The executor elects the alternate valuation date. Faith has nine brothers and sisters and each inherited a one-tenth interest

Question 2.2. (TCOs 2, 3, & 11) Discuss the computation of percentage depletion

Question 3.3. (TCOs 1, 2, 3, & 11) Travel status requires that the taxpayer be away from home overnight. I) What does away from home overnight mean? II) What tax advantages result from being in travel status

Question 4.4. (TCOs 1, 2, 3, & 11) 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

 

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