Accounting 122

Multiple Choice Question Which of the following statements is correct? Multiple choice question. Interest income may be deferred and recognized in a later year. Dividend income is generally taxed at ordinary rates. Interest income is typically taxed at ordinary rates. Dividend income from tax exempt organizations is exempt from tax. .

correct: Interest income is typically taxed at ordinary rates. X interest income may be deferred and recognized in a later year. Reason: Interest income is taxed when received. X Dividend income is generally taxed at ordinary rates. Reason: Dividend income is generally taxed at capital gains rates. X Dividend income from tax exempt organizations is exempt from tax. Reason: Dividend income is taxable but is generally taxed at lower capital gains rates.

Bridget, a single taxpayer, sold a building used in her business during the current year. The realized gain on the sale was $135,000. Of this amount, $95,000 is unrecaptured Section 1250 gain. How will Bridget be taxed on this gain assuming her marginal tax rate is 32 percent and her LTCG rate is 15%?

$95,000 will be taxed at 25 percent and $40,000 will be taxed at 15%.

Multiple Choice Question Which of the following investments do NOT pay periodic interest payments, but rather accumulate interest over the life? Multiple choice question. Mutual funds Certificate of deposits U.S. savings bonds Corporate bonds

U.S. savings bonds

Which of the following types of assets does NOT qualify as a capital asset? Multiple choice question. Assets classified as "personal use" Assets used in a trade or business Assets held as investments

Assets used in a trade or business Assets USED in a business are not considered to be capital assets. If a business has assets that it holds as investments, these will qualify as capital assets. Assets held as investments Reason: Assets USED in a business are not considered to be capital assets. If a business has assets that it holds as investments, these will qualify as capital assets.

Section 1202 provides that owners of qualified small business stock that is sold during 2022 and has been held for at least five years can exclude up to percent of the gain from taxation depending on the acquisition date.

Blank 1: 100

Carly sold land that she purchased 10 years ago for $3,000. The selling price of the land was $7,000 and Carly paid broker's fees of $420. When she originally purchased the land, she paid $1,000 to clear some of the brush in order to make a walking path down to a nearby lake. In the ten years since the purchase, Carly paid $200 per year to keep the path maintained. Carly's amount realized on the sale was $___ and her tax basis was $___ resulting in a capital gain of $__ for the year.

Blank 1: 6,580 or 6580 Blank 2: 4,000 or 4000 Blank 3: 2,580 or 2580

U.S. _______ _____ do NOT pay periodic interest payments, but the interest accumulates over the term of the bond.

Blank 1: Savings Blank 2: Bonds

Assets that are held for investment or personal use assets are referred to as ____assets. (Enter only one word per blank.)

Blank 1: capital

Regarding portfolio investments, ____ dividends generally are taxed at capital gains rates and _____ dividends are taxed at ordinary rates.

Blank 1: qualified or qualifying Blank 2: nonqualified

Which of the following choices describe collectibles? (Check all that apply.) Multiple select question. Collectibles held less than twelve months may still qualify for preferential tax treatment. Coin collections and stamp collections may qualify as collectibles. A gain on collectibles is taxed at a maximum rate of 28 percent. A gain on collectibles is taxed at a maximum rate of 15 percent. Corporate stock held in an investment portfolio may qualify as a collectible. A gain on collectibles is taxed at a maximum rate of 25 percent. Alcoholic beverages held over a year can qualify as a collectible.

Coin collections and stamp collections may qualify as collectibles. A gain on collectibles is taxed at a maximum rate of 28 percent. Alcoholic beverages held over a year can qualify as a collectible.

True or false: Interest income is generally taxed at lower capital gains rates.

False Reason: Interest income is taxed at ordinary rates, while dividend income is generally taxed at capital gains rates.

True or False Question True or false: Income from passive investments may be taxed at ordinary rates, preferential rates, or may be exempt from taxation while income from portfolio investments will be taxed at ordinary rates. True false question.True/False

False Reason: Passive investments generate ordinary income or losses. Portfolio income may be taxed a various rates or be exempt from taxation altogether.

True or false: Short-term capital gains are subject to preferential tax treatment when the capital gains rates are lower than the taxpayer's marginal income tax rate.

False Reason: Short-term capital gains are taxed as ordinary income. Long-term capital gains may receive preferential tax rates.

Select all that apply Which of the following choices determine the amount and the timing for recognizing interest income? (Check all that apply.) Multiple select question. If bonds are purchased at a discount in the secondary market, the discount is recognized as interest income at maturity. If bonds were issued at a premium, special original issue discount rules apply. If bonds were issued at a premium, taxpayers may amortize the premium over the life of the bond resulting in a decrease in interest income. The actual interest payments received are included in gross income. If bonds are purchased at a premium in the secondary market, the premium cannot be amortized, but is added to the basis of the bonds.

If bonds are purchased at a discount in the secondary market, the discount is recognized as interest income at maturity. If bonds were issued at a premium, taxpayers may amortize the premium over the life of the bond resulting in a decrease in interest income. The actual interest payments received are included in gross income. Reason: The premium may either be amortized and reduce the interest income over the life of the bond, or it can be added to the basis of the bond.

Which of the following choices concerning the recognition of interest income for corporate bond are CORRECT? (Check all that apply.) Multiple select question. If bonds were issued at a discount, special original issue discount rules apply. If bonds are purchased at a discount in the secondary market, the discount is amortized over the remaining life of the bond. If bonds are purchased at a premium in the secondary market, the premium can be amortized or added to the basis of the bond. If bonds were issued at a premium, taxpayers must amortize the premium over the life of the bond resulting in an increase in interest income. The actual interest payments received are included in gross income.

If bonds were issued at a discount, special original issue discount rules apply. If bonds are purchased at a premium in the secondary market, the premium can be amortized or added to the basis of the bond. The actual interest payments received are included in gross income.

Select all that apply Which of the following choices concerning the recognition of interest income for corporate bond are CORRECT? (Check all that apply.) Multiple select question. If bonds were issued at a premium, taxpayers must amortize the premium over the life of the bond resulting in an increase in interest income. If bonds were issued at a discount, special original issue discount rules apply. The actual interest payments received are included in gross income. If bonds are purchased at a premium in the secondary market, the premium can be amortized or added to the basis of the bond. If bonds are purchased at a discount in the secondary market, the discount is amortized over the remaining life of the bond. Need help? Review these concept resources.

If bonds were issued at a discount, special original issue discount rules apply. The actual interest payments received are included in gross income. If bonds are purchased at a premium in the secondary market, the premium can be amortized or added to the basis of the bond. Select a concept resource to continue.

Which of the following choices determine the amount and the timing for recognizing interest income? (Check all that apply.) Multiple select question. If bonds were issued at a premium, taxpayers may amortize the premium over the life of the bond resulting in a decrease in interest income. If bonds were issued at a premium, special original issue discount rules apply. Reason: Bonds must be issued at a discount to have the original issue discount rules apply. If bonds are purchased at a premium in the secondary market, the premium cannot be amortized, but is added to the basis of the bonds. Reason: The premium may either be amortized and reduce the interest income over the life of the bond, or it can be added to the basis of the bond. The actual interest payments received are included in gross income. If bonds are purchased at a discount in the secondary market, the discount is recognized as interest income at maturity.

If bonds were issued at a premium, taxpayers may amortize the premium over the life of the bond resulting in a decrease in interest income. The actual interest payments received are included in gross income. If bonds are purchased at a discount in the secondary market, the discount is recognized as interest income at maturity.

Please choose the statement that is INCORRECT regarding portfolio and passive investments? Multiple choice question. Losses from portfolio investments are deferred until the investment is sold. Losses from portfolio investments are deductible in full against ordinary income. Losses from passive investments may be deducted immediately or they may have to be deferred. Losses from passive investments not subject to at-risk limits will be deducted at ordinary rates.

Losses from portfolio investments are deductible in full against ordinary income.

Multiple Choice Question Which of the following types of income is generated from passive investments rather than portfolio investments? Multiple choice question. Dividend income Capital gains Interest income Operating income

Operating income

Select all that apply Which of the following assets would generally qualify as capital assets? (Check all that apply.) Multiple select question. Inventory in a business Warehouse used in a business Personal residence Coin collection Land held for investment Corporate stock

Personal residence Coin collection Land held for investment Corporate stock Reason: Real property used in trade or business is not a "capital asset" under Section 1221.

Regarding portfolio investments, which types of income generally are taxed at a rate lower than the taxpayer's marginal tax rate? (Check all that apply.) Multiple select question. Qualified dividends Nonqualified dividends Short-term capital gains Long-term capital gains Interest on corporate bonds

Qualified dividends Long-term capital gains

Question Mode Ordering Question Click and drag on elements in order Qi, Julian, and Omar are all in the 24% tax bracket. Qi has received $3,000 in corporate bond interest, Omar $2,500 in savings account interest, and Julian $2,500 in dividends from a US corporation. Rank the taxpayers by their tax liability from the amounts received, from least to greatest. Instructions Choice 1 of 3. Omar's $2,500 toggle button Omar's $2,500 Choice 2 of 3. Julian's $2,500 toggle button Julian's $2,500 Choice 3 of 3. Qi's $3,000 toggle button Qi's $3,000

TAX LIABILITY FROM THE AMOUNTS RECEIVED FROM LEAST TO GREATEST 1.Julian received $2500 in dividends from a US Corporation There are two type of dividend -qualified and non qualified qualified are taxable at 15% if the tax payer are under 24% bracket Non qualified are taxable at same regular tax percentage we assume JULIAN dividend is qualified so $2500 tax @ 15%=$375 2 Omar received $2500 saving account interest As per Law saving account interest is taxable at the same rate under bracket so Tax rate is 24% so tax is $2500@24%=$600 3 QI received $3000 as interest on corporate bond Interest on corporate bond is taxable at the same tax bracket while saving and govt bonds are exempt so tax is $3000@24%= $720

Fashion Question Multiple Select Question Select all that apply Which of the following answers pertain to net short-term capital gains and losses? (Check all that apply.) Multiple select question. The holding period is one year or less. The gains are taxed at ordinary tax rates. The holding period is five years or less. The gains are taxed at lower, preferential tax rates. The holding period is more than two years. The gains may be taxed at one of three preferential (15%, 25%, 28%) rates.

The holding period is one year or less. The gains are taxed at ordinary tax rates.

Multiple Select Question Select all that apply Which of the following choices describes the tax treatment for qualified dividends? (Check all that apply.) Multiple select question. The income may be taxed as low as 0%, depending on the taxpayer's ordinary income rate. The income is always taxed at the taxpayer's ordinary income tax rate. The income may be taxed at a rate as high as 20%, depending on the taxpayer's taxable income. The income is taxed at the lower of the taxpayer's marginal rate or at a maximum 15%.

The income may be taxed as low as 0%, depending on the taxpayer's ordinary income rate. The income may be taxed at a rate as high as 20%, depending on the taxpayer's taxable income.

How is a capital asset's tax basis calculated? (Check all that apply.) Multiple select question. The tax basis includes the the sales proceeds generated at the time the taxpayer sells the asset. The tax basis is reduced by depreciation taken on the asset in prior years. The tax basis includes costs incurred in preparing the asset for initial use. The tax basis includes the original cost (or other basis) in the asset. The tax basis includes costs to substantially improve the asset.

The tax basis includes costs incurred in preparing the asset for initial use. The tax basis includes the original cost (or other basis) in the asset. The tax basis includes costs to substantially improve the asset.

What type of gain is taxed at a maximum long-term capital gains rate of 25%? Multiple choice question. Unrecaptured Section 1250 gain from the sale of business property Gain from the sale of personal use assets Gain from the sale of collectibles Gain from the sale of intangible investments, such as stock

Unrecaptured Section 1250 gain from the sale of business property

Select all that apply Which of the following choices concerning the recognition of interest income for corporate bond are CORRECT? (Check all that apply.) Multiple select question. If bonds were issued at a premium, taxpayers must amortize the premium over the life of the bond resulting in an increase in interest income. If bonds were issued at a discount, special original issue discount rules apply. The actual interest payments received are included in gross income. If bonds are purchased at a premium in the secondary market, the premium can be amortized or added to the basis of the bond. If bonds are purchased at a discount in the secondary market, the discount is amortized over the remaining life of the bond.

f bonds were issued at a discount, special original issue discount rules apply. The actual interest payments received are included in gross income. If bonds are purchased at a premium in the secondary market, the premium can be amortized or added to the basis of the bond.