Tax 1 Final Exam

On June 2, 2020, Laban's TV sold Hally a large HD TV on account for $12,000. Laban's TV Sales uses the accrual method. In 2021, on the balance on the account with $8000, Hally filed for bankruptcy. Laban was notified that he could not expect to receive any of the amount owed to him. In 2022 final settlement was made, and Laban received $1000. How much bad debt loss can Laban deduct in 2022? $12,000 $8,000 $7,000 $0

$0

This year, Carol, a single taxpayer, purchased a vacation home for $400,000 using a home equity loan of $350,000 on her principal residence. She has no other debt on her principal residence. Carol paid $16,000 of interest on the debt this year. How much of this interest is deductible assuming that Carol itemizes her deductions? $10,000 $125,000 $0 $16,000

$0

Peggy is in the business of factoring accounts receivable. Last year, she purchased a $30,000 account receivable for $25,000. This year, the account was settled for $25,000. How much loss can Peggy deduct and in which year? $0 for the current year $5,000 for the prior year and $5,000 for the current year $5,000 for the prior year $5,000 for the current year

$0 for the current year

Mary incurred a $20,000 nonbusiness bad debt last year. She also had an $18,000 long-term capital gain last year. Her taxable income for last year was $25,000. During the current year, she unexpectedly collected $12,000 on the debt. How should Mary account for the collection? $8,000 income $0 income $11,000 income $12,000 income

$12,000 income

Will purchased an apartment building on November 16, 2022, for $3,000,000. Determine the cost recovery deduction for 2022. $13,650 $11,910 $22,740 $9,630

$13,650

Noel is in the business of dairy farming. During the year, one of her barns was completely destroyed by fire. The adjusted basis of the barn was $90,000. The fair market value of the barn before the fire was $75,000. The barn was insured for 95% of its fair market value, and Noel recovered this amount under the insurance policy. She has adjusted gross income of $40,000 for the year (before considering the casualty). Determine the amount of loss she can deduct on her tax return for the current year. $14,750 $3,750 $14,650 $18,750

$18,750

Josh has investments in two passive activities. Activity A (acquired three years ago) produces income of $30,000 this year, while Activity B (acquired two years ago) produces a loss of $50,000. What is the amount of Josh's suspended loss for the year? $0 $18,000 $20,000 $50,000

$20,000

Katelynn purchased a new business asset (five-year asset) on September 30, 2021 at a cost of $100,000. On October 4, 2021, she placed the asset in service. This was the only asset she placed in service in 2022. Katelynn did not Alex section 179 or additional first year depreciation. On August 20, 2022 Katelynn sold the asset. Determine the cost recovery for 2022 for the asset. $23,750 $19,000 $14,250 $38,000

$23,750

Under the terms of a divorce agreement entered into in 2017, Maria was to pay her wife Joyce $2,000 per month in alimony and $500 per month in child support. For a 12-month period, Maria can deduct from gross income (and Joyce must include in gross income): $30,000. $0. $6,000. $24,000.

$24,000

Indigo company requires a new machine five-year MACRS property on February 2, 2022 at a cost of $100,000. On November 18 2022, indigo also requires office equipment, seven-year MACRS property and the cost of $50,000 and you know it does not make a section 179 expense election in chooses not to take additional first year depreciation. What is indigo total MACRS deduction for 2022? $27,145 $30,000 $36,785 $150,000

$27,145

Jena is a full-time undergraduate student at State University and qualifies as a dependent of her parents. Her only source of income is a $10,000 athletic scholarship ($1,000, books; $5,500, tuition; $500, student activity fee; and $3,000, room and board). Jena's gross income for the year is: $10,000. $4,000. $500. $3,000.

$3000

Green, Inc., provides group term life insurance for all of its employees. The coverage equals twice the employee's annual salary. Sam, a vice president, worked all year for Green, Inc., and received $200,000 of coverage for the year at a cost to Green of $1,500. The Uniform Premiums (based on Sam's age) are $0.25 per month for $1,000 of protection. How much must Sam include in gross income this year? $375. $450. $0. $600.

$450

Chen incurred $58,500 of interest expense this year related to his investments. His investment income includes $15,000 of interest, $9,000 of qualified dividends, and a $22,500 net capital gain on the sale of securities. The maximum amount of Chen's investment interest expense deduction for the year is: $37,500. $24,000. $46,500. $15,000.

$46,500.

Zeke made the following donations to qualified charitable organizations during the year: Basis Fair Market Value Used clothing of taxpayer and his family (all acquired more than a year ago) $ 1,350 $ 375 Stock in ABC, Inc., held as an investment for 15 months 12,000 10,875 Stock in MNO, Inc., held as an investment for 11 months 15,000 18,000 Real estate held as an investment for two years 15,000 30,000 ​ 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 charitable contribution deduction for the year is: $60,375. $43,350. $59,250. $56,250.

$56,250.

Ayla, age 17, is claimed by her parents as a dependent. During 2022, she had interest income from a bank savings account of $2,000 and income from a part-time job of $4,200. Ayla's taxable income is: $4,200 - $4,600 = $0. $6,200 - $12,950 = $0. $6,200 - $4,600 = $1,600. $6,200 - $4,200 = $2,000.

$6,200 - $4,600 = $1,600

White company requires a new machine (seven-year property) on January 10, 2022, at a cost of $620,000. White makes the election to expense the maximum amount under section 179 and wants to make an additional first year depreciation allowed. No election is made it to use the straight-line method. Determine the total deductions in calculating taxable income related to the machine for 2022, assuming that white reports taxable income of $800,000. $88,598 $301,159 $568,574 $620,000

$620,000

Hugh, a self-employed individual, paid the following amounts during the year: Real estate tax on Iowa residence $3,800 State income tax 1,700 Real estate taxes on a vacation home 2,100 Gift tax paid on gift to daughter 1,200 State sales taxes 1,750 State occupational license fee 300 Property tax on value of his automobile (used 100% for business) 475 ​ What is the maximum amount Hugh can claim as taxes in itemizing deductions from AGI? $8,850 $7,650 $10,000 $9,625

$7,650

Aaron is a self-employed practical nurse who works from his home. He provides nursing care for disabled persons living in their residences. During the day, he drives his car as follows. Miles Aaron's home to patient Louise 12 Patient Louise to patient Carl 4 Patient Carl to patient Betty 6 Patient Betty to Aaron's home 10 ​ Aaron's deductible mileage for each workday is: 20 miles. 12 miles. 32 miles. 22 miles.

32 miles.

In which of the following situations may the individual not be claimed as a dependent of the taxpayer? A former spouse who lives with the taxpayer (divorce took place last year). A stepmother who does not live with the taxpayer. A married daughter who lives with the taxpayer. A half-brother who does not live with the taxpayer and is a citizen and resident of Honduras.

A half-brother who does not live with the taxpayer and is a citizen and resident of Honduras.

Which of the following is not allowed as an itemized deduction? Cash donation to a church. A subscription to the Wall Street Journal to help with personal investment decisions. Interest expense on a $800,000 loan incurred in 2016 to buy a principal residence. Gambling losses to the extent of gambling winnings.

A subscription to the Wall Street Journal to help with personal investment decisions.

Under the alimony rules: To determine whether a cash payment is alimony, one must consult the state laws that define alimony. A person who receives a property division has experienced an increase in wealth and thus should be subject to tax. Alimony paid per a 2015 divorce agreement is included in the gross income of the recipient of the payments. A person who earns $90,000 and pays $20,000 in alimony per a divorce agreement entered into in 2021, is allowed to deduct the $20,000.

Alimony paid per a 2015 divorce agreement is included in the gross income of the recipient of the payments.

Jay, a single taxpayer, purchased an annuity to help provide income during his retirement. He paid $36,000 for the annuity that provided a monthly benefit starting at his retirement date for the rest of Jay's life. His life expectancy at the time of his retirement was 180 months. Jay collected 192 payments before he died. Which of the following is true? All of the last 12 payments he received are taxable. Since Jay is no longer working, none of the payments must be included in his gross income. If Jay's income is below $25,000, none of the payments he receives are taxable. The first $36,000 received is a nontaxable recovery of capital, and all subsequent annuity payments are taxable.

All of the last 12 payments he received are taxable.

Which of the following factors should be considered in determining whether an activity is treated as an appropriate economic unit? All of these. The geographic location. The similarities and differences in types of business. The extent of common ownership.

All of these.

Candi and Connie own a house at the beach. The house was rented to unrelated parties for eight 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 Net rental loss ($1,500) What is the correct treatment of the rental income and expenses and Bob and April's joint income tax return for the current year assuming the IRS approaches used is applicable? A) only the mortgage interest in property taxes should be deducted B) A $1500 loss should be reported C) since the house was used more than 10 days personally by Bob and April the rental expenses, (other than mortgage interest in property taxes) are limited to the gross rental income in excess of deductions for interest and taxes allocated to the rental use D) bob and April should include none of the rental income or expenses related to the beach house in their current year income tax return

B) A $1500 loss should be reported

Estee sells land (adjusted basis of $120,000) to his adult son, Victor, for it appraised value of $95,000. Which of the following statements is correct? A) Estee's recognize loss is $25,000 ($95,000 amount realized - $120,000 adjusted basis) B) victors adjusted basis for the land is $120,000 ($95,000 amount realized - $120,000 adjusted basis) C) if victor subsequently sells the land for $112,000. He has no recognize gain or loss. D) only a and b are correct

C) if victor subsequently sells the land for $112,000. He has no recognize gain or loss

The de minimis fringe benefit: Can be provided on a discriminatory basis. Exclusion is limited to $250 per year. Exclusion applies only to property received by the employee. Exclusion applies to employee discounts.

Can be provided on a discriminatory basis.

Which of the following expenses, if any, qualify as deductible? Contributions to a Coverdell Education Savings Account (CESA). Contributions to a qualified tuition program (§ 529 plan). Job-hunting expense of FBI agent who applies for the job of city manager of Beaumont, TX. Contribution to a traditional IRA.

Contribution to a traditional IRA.

Which of the following is deductible in 2021? A) tax return preparation, fees of an individual B) allowable, hobby expenses, an excess of hobby income C) moving expenses, an excess of reimbursement D) Cash contribution to the Salvation Army, a qualified charity

D) Cash contribution to the Salvation Army, a qualified charity

Which of the following statements is correct in connection with the investigation of a business? A) regardless of whether the taxpayers already engage in the trade or business, the expenses must be capitalized and amortized B) if the taxpayer is not already engaged in the trade or business, the expenses incurred are deductible if the project is abandoned C) that business must be related to the taxpayer's present business for any expense ever to be deductible D) expenses may be deducted immediately by a taxpayer engaged in a similar trade or business, regardless of whether the business being investigated is acquired

D) expenses may be deducted immediately by a taxpayer engaged in a similar trade or business, regardless of whether the business being investigated is acquired

The § 222 deduction for tuition and related expenses is available: Regardless of the amount of a taxpayer's MAGI. To a married taxpayer filing a separate return. Even if a taxpayer does claim the standard deduction. To cover room and board expenses to attend college.

Even if a taxpayer does claim the standard deduction.

A taxpayer can carry back any NOL incurred 2 years and then forward up to 20 years. True False

False

All of a taxpayer's tax credits relating to a passive activity can be utilized when the activity is sold at a loss. True False

False

Every year, Teal Corporation gives each employee a turkey and a bottle of wine during the December holiday season. These gifts are subject to the 50% limitation. True False

False

For purposes of computing the deduction for qualified residence interest, a qualified residence includes the taxpayer's principal residence and two other residences of the taxpayer or spouse. True False

False

If an election is made to defer deduction of research expenses, the amortization period is based on the expected life of the research project if less than 60 months. True False

False

Judy paid $40 for Girl Scout cookies and $40 for Boy Scout popcorn. She may claim an $80 charitable contribution deduction. True False

False

Katelynn sells land to her adult son, Wes, for its $20,000 appraised value. Her adjusted basis for the land is $25,000. Katelynn's recognized loss is $5,000, and Wes's adjusted basis for the land is $25,000 ($20,000 cost + $5,000 recognized loss of Katelynn). True False

False

Several years ago Kyle purchased 2000 shares of red corporations section 1244 stock from Preston for $40,000. Last year, Kyle sold 1/2 of his red corporation stock to bill for $12,000. during the current year Kyle sold the remaining red corporation stock for $3000. Kyle has a $17,000. (3000-20000) ordinary kids for the current year. True False

False

Sherri owns an interest in a business that is not a passive activity and in which she has $20,000 at risk. If the business incurs a loss from operations during the year and her share of the loss is $32,000, this loss will be fully deductible. True False

False

The amount of loss for personal destruction of business property is declining fair market value of the business property True False

False

The value added tax (VAT) has not had wide acceptance in the international community. True False

False

Under the income tax formula, a taxpayer must choose between deductions for AGI and the standard deduction. True False

False

Under the simplified method, the maximum office in the home deduction allowed is the greater of $1,500 or the office square feet × $5. True False

False

On January 1, Father (Dave) loaned Daughter (Debra) $100,000 to purchase a new car and to pay off college loans. There were no other loans outstanding between Dave and Debra. The relevant Federal rate on interest was 6 percent. The loan was outstanding for the entire year. Debra must recognize $6,090 of imputed interest income. Debra must recognize $6,090 of imputed interest income if Dave has at least $6,090 of investment income. If Debra has $15,000 of investment income, Dave must recognize $6,090 of imputed interest income. Dave must recognize $6,090 of imputed interest income regardless of the amount of Debra's investment income.

If Debra has $15,000 of investment income, Dave must recognize $6,090 of imputed interest income.

Ned, a college professor, owns a separate business (not real estate) in which he participates in the current year. He has one employee who works part-time in the business. If Ned participates for 500 hours and the employee participates for 520 hours during the year, Ned qualifies as material participant. If Ned participates for 95 hours and the employee participates for 5 hours during the year, Ned probably does not qualify as material participant. If Ned participates for 600 hours and the employee participates for 2,000 hours during the year, Ned qualifies as a material participant. If Ned participates for 120 hours and the employee participates for 120 hours during the year, Ned does not qualify as a material participant.

If Ned participates for 600 hours and the employee participates for 2,000 hours during the year, Ned qualifies as a material participant.

Which of the following statements relating to the standard deduction, if any, is correct? If spouses file separate returns, both must claim the standard deduction (rather than itemize their deductions from AGI). If a taxpayer is claimed as a dependent of another, his or her additional standard deduction is allowed in full (i.e., no adjustment is necessary). If a taxpayer is claimed as a dependent of another, no basic standard deduction is allowed. If a taxpayer dies during the year, his or her standard deduction must be prorated

If a taxpayer is claimed as a dependent of another, his or her additional standard deduction is allowed in full (i.e., no adjustment is necessary).

Grape Corporation purchased a machine in December of the current year. This was the only asset purchased during the current year. The machine was placed in service in January of the following year. No assets were purchased in the following year. Grape's cost recovery would begin: In the current year using a half-year convention. In the following year using a mid-quarter conventions In the current year using a mid-quarter convention In the following year using a half-year convention

In the following year using a half-year convention

The tax advantages of being self-employed (rather than being an employee) include: The self-employment tax is lower than the Social Security tax. The overall limitation (50%) on meals does not apply. An office in the home deduction (from AGI) is available. Job-related expenses are deductions for AGI.

Job-related expenses are deductions for AGI.

Which of the following taxpayers may file as a head of household in 2022? Marco provides all of the support for his mother, Sienna, who lives by herself in an apartment in Fort Lauderdale. Marco pays the rent and other expenses for the apartment and properly claims his mother as a dependent. Tammy provides over one-half the support for her 18-year old brother, Dan. He earned $4,600 in 2022 working at a fast-food restaurant and is saving his money to attend college in 2023. Dan lives in Tammy's home. Juan's spouse left him late in December of 2021. No legal action was taken and Juan has not heard from his spouse in 2022. Juan supported his 6-year-old son, who lived with him throughout 2022. Tammy only Marco, Tammy, and Juan Marco only Marco and Juan only

Marco, Tammy, and Juan

Jeremy is married to Amy, who abandoned him in 2021. He has not seen or communicated with her since April of that year. He maintains a household in which their son, Evan, lives. Evan is age 25 and earns over $6,000 each year. For tax year 2022, Jeremy's filing status is: Married, filing jointly. Married, filing separately. Head of household. Surviving spouse.

Married, filing separately.

The amount of Social Security benefits received by an individual that he or she must include in gross income: Is computed in the same manner as an annuity [exclusion = (cost/expected return) × amount received]. May be zero or as much as 85% of the Social Security benefits received, depending upon the taxpayer's Social Security benefits and other income. May not exceed 50% of the Social Security benefits received. May not exceed the portion contributed by the employer.

May be zero or as much as 85% of the Social Security benefits received, depending upon the taxpayer's Social Security benefits and other income.

Which of the following decreases a taxpayer's at-risk amount? Amounts borrowed for use in the activity for which the taxpayer is personally liable or has pledged as security property not used in the activity. None of these. Taxpayer's share of amounts borrowed for use in the activity that is qualified nonrecourse financing. Taxpayer's share of the activity's income.

None of these.

As a general rule I. Income from property is taxed to the person who owns the property. II. Income from services is taxed to the person who earns the income. III. The assignee of income from property must pay tax on the income IV. The person who receives the benefit of the income must pay the tax on the income. Only I and II are true. Only III and IV are true. I, II, III, and IV are true. I, II, and III are true, but IV is false.

Only I and II are true.

Under Swan Company's cafeteria plan, all full-time employees are allowed to select any combination of the following benefits, but the total received by each employee cannot exceed $8,000 a year. I. 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. Child care 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? Sam, a full-time employee, selects choices II and III and $2,000 cash. His gross income must include the $2,000. Paul, a full-time employee, elects to receive $8,000 cash because his wife's employer provides these same insurance benefits, which would cover him (II). Paul is not required to include the $8,000 in gross income. Sue, a full-time employee, elects to receive choices I, II, and $3,200 for III. Sue is required to include $3,200 in gross income. All of these.

Sam, a full-time employee, selects choices II and III and $2,000 cash. His gross income must include the $2,000.

Your friend Scotty informs you that in 2022 he received a tax-free reimbursement of some medical expenses he paid in 2021. Which of the following statements best explains why Scotty is not required to report the reimbursement in gross income? Scotty itemized deductions in 2021. Scotty did not itemize deductions in 2021. Scotty itemized deductions in 2022. Scotty did not itemize deductions in 2022

Scotty did not itemize deductions in 2021.

Under the deemed substantiation method of accounting for expenses, what is the maximum amount taxpayers are allowed as a deduction without being required to substantiate the amount of the expenses? $75 per day. All expenses up to $25 per day. The appropriate Federal per diem amount. The per diem rate established by the state in which they live.

The appropriate Federal per diem amount.

What are the effects of a below-market loan for $100,000 made by a corporation to its chief executive officer as an enticement to get him to remain with the company? The corporation has imputed interest income and dividends paid. The corporation has imputed interest income and the employee is deemed to have received a gift. The employee has imputed compensation income and the corporation has imputed interest income. The employee has no income unless the funds are invested and produce investment income for the year.

The employee has imputed compensation income and the corporation has imputed interest income.

The taxable portion of Social Security benefits may be affected by: The individual's tax-exempt interest income. The number of quarters the individual worked. The taxpayer's itemized deductions. The individual's standard deduction.

The individual's tax-exempt interest income

An employee can exclude from gross income the value of meals provided by his or her employer whenever: The meal is not extravagant. The meals are provided on the employer's premises for the employer's convenience. There are no places to eat near the work location. The meals are provided for the convenience of the employee.

The meals are provided on the employer's premises for the employer's convenience.

A U.S. citizen worked in a foreign country for the period July 1, 2021 through August 1, 2022. Her salary was $10,000 per month. Also, in 2021 she received $5,000 in dividends from foreign corporations (not qualified dividends). No dividends were received in 2022. Which of the following is correct? The taxpayer cannot exclude any of the income because she was not present in the foreign country more than 330 days in either 2021 or 2022. The taxpayer can exclude from U.S. gross income $60,000 salary in 2021, but in 2022 she will exceed the 12-month limitation and, therefore, all of the 2022 compensation must be included in gross income. All of the dividends must be included in 2021 gross income. The taxpayer can exclude a portion of the salary from U.S. gross income in 2021 and 2022, and all of the dividend income. The taxpayer must include the dividend income of $5,000 in 2021 gross income, but she can exclude a portion of the compensation income from U.S. gross income in 2021 and 2022.

The taxpayer must include the dividend income of $5,000 in 2021 gross income, but she can exclude a portion of the compensation income from U.S. gross income in 2021 and 2022.

A hobby activity results in all of the hobby income being included in AGI and no deductions being allowed for hobby-related expenses per the Tax Cuts and Jobs Act from 2018-2025. True False

True

A letter ruling applies only to the taxpayer who asks for and obtains a letter ruling. True False

True

A purchased trademark is a § 197 intangible asset True False

True

A taxpayer can carry a. NOL forward indefinitely. True False

True

A taxpayer who itemizes completes Schedule A (Form 1040). True False

True

A theft loss of investment property is an itemized deduction, not subject to the 2% of AGI floor True False

True

Al contributed a painting to the Metropolitan Art Museum of St. Louis, MO. The painting, purchased six years earlier, was worth $40,000 when donated, and Al's basis was $25,000. If this painting is immediately sold by the museum and the proceeds are placed in the general fund, Al's charitable contribution deduction is $25,000 (subject to percentage limitations). True False

True

Assets that do not have a determinable useful like are not eligible for cost recovery under MACRS. True False

True

Currently, personal casualty, loss reduction is allowed only for losses, incurring a federally declared disaster area. True False

True

Currently, the top income tax rate in effect is not the highest it has ever been. True False

True

Eileen lives and works in Mobile. She travels to Rome for an eight-day business meeting after which she spends two days touring Italy. All of Eileen's airfare is deductible. True False

True

For tax purposes, travel is a broader classification than transportation. True False

True

Georgia contributed $2,000 to a qualifying Health Savings Account in the current year. The entire amount qualifies as an expense deductible for AGI. True False

True

Gray Company, a closely held C corporation, incurs a $50,000 loss on a passive activity during the year. The company has active income of $34,000 and portfolio income of $24,000. If Gray is not a personal service corporation, it may deduct $34,000 of the passive activity loss. True False

True

If startup expenses total $53,000, $51,000 of those costs are amortized over 180 months. True False

True

Losses on rental property are classified as deductions for AGI True False

True

On the recommendation of a physician, Ed has a swimming pool installed at his residence because of a heart condition. If he is allowed to deduct all or part of the cost of the pool, Ed's increase in utility bills due to the operation of the pool qualifies as a medical expense. True False

True

On transfers by death, the Federal government relies on an estate tax, while states impose an estate tax, an inheritance tax, both taxes, or neither tax. True False

True

Percentage depletion enables a taxpayer to recover more than the cost of an asset in the form of tax deductions True False

True

The constructive receipt doctrine requires that income be recognized when it is made available to the cash basis taxpayer, although it has not been actually received. The constructive receipt doctrine does not apply to accrual basis taxpayers. True False

True

The cost recovery period for three-year class property is four years. True False

True

The filing status of a taxpayer (e.g., single, head of household) must be identified before the applicable standard deduction is determined. True False

True

The kiddie tax does not apply to a child whose earned income is more than one-half of his or her support. True False

True

Under the 12-month rule for the current-period deduction of prepaid expenses of cash basis taxpayers, the asset must expire or be consumed by the end of the tax year following the year of payment. True False

True

When a business is operated as an S corporation, a disadvantage is that the shareholder must pay the tax on his or her share of the S corporation's income even though the S corporation did not distribute the income to the shareholder. True False

True

When determining whether an individual is a material participant, participation by an owner's spouse generally counts. True False

True

Wes's at-risk amount in a passive activity is $25,000 at the beginning of the current year. His current loss from the activity is $35,000 and he has no passive activity income. At the end of the current year, which of the following statements is incorrect? Wes has a loss of $35,000 suspended under the passive activity loss rules. Wes has a loss of $10,000 suspended under the at-risk rules. Wes has an at-risk amount in the activity of $0. Wes has a loss of $25,000 suspended under the passive activity loss rules.

Wes has a loss of $35,000 suspended under the passive activity loss rules.

Regarding the Tax Tables related to the Federal income tax, which of the following statements is correct? a) For any one year, the Tax Tables are issued by the IRS after the Tax Rate Schedules. b) The Tax Tables will always yield the same amount of tax as the Tax Rate Schedules. c) Taxpayers can elect as to whether the use the Tax Tables or the Tax Rate Schedules. d) The Tax Tables can be used by an estate but not by a trust. e) No correct answer is given.

a) For any one year, the Tax Tables are issued by the IRS after the Tax Rate Schedules.

Federal tax legislation generally originates in which of the following? a) House Ways and Means Committee b) None of these c) Senate Floor d) Internal Revenue Service e) Senate Finance Committee

a) House Ways and Means Committee

Alicia was involved in an automobile accident in 2022. Her car was used 60% for business and 40% for personal use. The car had originally cost $40,000. At the time of the accident, the car was worth $20,000 and Alicia had taken $8,000 of depreciation. The car was totally destroyed and Alicia had let her car insurance expire. If her AGI is $50,000 (before considering the loss), determine her AGI and itemized deduction for the casualty loss. a. $34,000; $-0-. b. $50,000; $-0-. c. $34,000; $4,500. d. $26,000; $5,700.

a. $34,000; $-0-.

The taxpayer's marginal federal and state tax rate is 25%. Which would the taxpayer prefer? a) $1.00 taxable income rather than $1.25 tax-exempt income. b) $1.40 taxable income rather than $1.00 tax-exempt income. c) None of these. d) $1.00 taxable income rather than $.75 tax-exempt income. e) $1.25 taxable income rather than $1.00 tax-exempt income.

b) $1.40 taxable income rather than $1.00 tax-exempt income.

Jack received a court award in a civil libel and slander suit against National Gossip. He received $120,000 for damages to his professional reputation, $100,000 for damages to his personal reputation, and $50,000 in punitive damages. Jack must include in his gross income as a damage award: a) $100,000. b) $120,000. c) $270,000. d) None of these. e) $0.

c) $270,000.

During the year, John (a self-employed management consultant) went from Milwaukee to Hawaii on business. Preceding a five-day business meeting, he spent four days vacationing at the beach. Excluding the vacation costs, his expenses for the trip are: Airfare $3,200 Lodging 900 Meals 800 Entertainment 600 ​ Presuming no reimbursement, deductible expenses are: a) $3,200. b) $3,900. c) $4,500. d) $5,500.

c) $4,500.

A qualifying child cannot include: a) A brother who is 28 years of age and disabled. b) A nonresident alien. c) A grandmother. d) A married son who files a joint return.

c) A grandmother.

Taxes not imposed by the Federal government include: a) Gas guzzler tax. b) Customs duties (tariffs on imports). c) Tax on rental cars. d) None of these. e) Tobacco excise tax.

c) Tax on rental cars.

Which court decision would probably carry more weight? a) U.S. Court of Federal Claims b) Tax Court Memorandum decision c) United States Supreme Court d) U.S. Tax Court decision e) U.S. District Court decision

c) United States Supreme Court

Which, if any, of the following transactions will decrease a taxing jurisdiction's ad valorem tax revenue imposed on real estate? a) A public school is razed and turned into a city park. b) An abandoned church is converted to a restaurant. c) A local university sells a dormitory that will be converted for use as an apartment building. d) A tax holiday is granted to an out-of-state business that is searching for a new factory site. e) None of these.

d) A tax holiday is granted to an out-of-state business that is searching for a new factory site.

Which of the following sources has the highest tax validity? a) Revenue Ruling b) Revenue Procedure c) Regulations d) None of these e) Internal Revenue Code section

e) Internal Revenue Code section

Which, if any, of the following taxes are proportional (rather than progressive)? a) Federal estate tax b) Federal gift tax c) Federal individual income tax d) All of these e) State general sales tax

e) State general sales tax

If a taxpayer decides not to pay a tax deficiency, he or she must go to which court? a) None of these b) Appropriate U.S. Circuit Court of Appeals c) U.S. Court of Federal Claims d) U.S. District Court e) U.S. Tax Court

e) U.S. Tax Court