The federal income tax applicable to corporations: (Points : 5) requires the det

Question

The federal income tax applicable to corporations: (Points : 5) requires the determination of adjusted gross income.
allows a deduction for dependency exemptions.
allows a deduction for personal exemptions.
allows a deduction for the standard deduction.
None of the above

2. (TCOs 2, 3, 6, 8, 9, & 10) Which of the following is considered a primary source of the tax law? (Points : 5) Article in the Journal of Taxation, February 2004
U.S. Tax Court decision
Technical advice memoranda
General counsel memoranda
None of the above

3. (TCOs 2, 3, 6, 8, 9, & 10) Equity considerations can be used to justify: (Points : 5) the foreign tax credit.
the credit for child and dependent care expenses.
the deduction for charitable contributions.
the tax treatment of prepaid subscription revenue.
None of the above

4. (TCOs 2, 3, 6, 8, 9, & 10) Which, if any, of the following is a deduction from AGI? (Points : 5) Individual retirement account contributions
Moving expenses
Investment interest expense
One-half of self-employment tax paid
All of the above

5. (TCOs 2, 3, 6, 8, 9, & 10) Dale, age 16, is claimed as a dependent on his parents' tax return. During 2011, he had interest income of $3,750 from a savings account and $500 wages from a part-time job. Dale's taxable income is:(Points : 5) $4,250.
$3,750.
$3,700.
$3,300.
None of the above

6. (TCOs 2, 3, 6, 8, 9, & 10) Which statement is true with respect to letter rulings? (Points : 5) They are issued by the Regional Office of the IRS.
They deal with completed transactions.
They may be requested for any area of taxation.
They are issued at the request of the taxpayer.
None of the above

7. (TCO 6) During 2011, taxpayers decided to sell their residence, which had a basis of $350,000. They had owned and occupied the residence for 8 years. To make it more attractive to prospective buyers, they had it painted in April at a cost of $5,000 and paid for the work immediately. They sold the house in May for $500,000. Broker's commissions and other selling expenses amounted to $30,000. They purchased a new residence in June for $250,000. What is the recognized gain? (Points : 5) $0
$115,000
$120,000
$150,000
None of the above

8. (TCO 6) Vivian and Leonard exchange real estate in a like-kind exchange. Vivian's basis in the real estate, subject to a $150,000 mortgage, is $220,000 and the fair market value is $300,000. She receives real estate with a fair market value of $150,000, and Leonard assumes the mortgage. What is Vivian's recognized gain and adjusted basis for the real estate received? (Points : 5) $0; $240,000
$80,000; $150,000
$80,000; $300,000
$150,000; $300,000
None of the above

9. (TCO 6) Mason exchanges a machine used in his trade or business for another machine. In addition, he gives shares of Intel stock, which have a fair market value of $27,000 and a basis of $23,000. The old machine has an adjusted basis of $30,000, and the new machine has a fair market value of $90,000. What is the recognized gain or loss and the basis of the new machine? (Points : 5) $4,000 and $61,000
$33,000 and $61,000
$4,000 and $90,000
$33,000 and $90,000
None of the above

10. (TCO 6) Herbert exchanges a business machine, which has an adjusted basis of $40,000, for a new machine worth $40,000. In addition, he receives cash of $10,000. What is the recognized gain or loss and the basis of the new machine? (Points : 5) $0 and $10,000
$0 and $50,000
$10,000 and $50,000
$10,000 and $40,000
None of the above

11. (TCOs 2, 6, & 11) Payton purchased his home for $300,000. As a sole proprietor, he operates a certified public accounting practice in his home. For this business, he uses one room exclusively and regularly as a home office. In Year 1, $1,450 of depreciation expense on the home office was deducted on his income tax return. In Year 2, Payton sustained losses in his business; therefore, no depreciation was taken on the home office. Had he been allowed to deduct depreciation expense, his depreciation expense would have been $1,700. What is the adjusted basis in the home? (Points : 5) $295,000
$296,850
$298,550
$300,000
None of the above The federal income tax applicable to corporations: (Points : 5) requires the determination of adjusted gross income.
allows a deduction for dependency exemptions.
allows a deduction for personal exemptions.
allows a deduction for the standard deduction.
None of the above

Explanation / Answer

1)A

2 )C

3)B

4)C

5)A

6)E

7)D

8)B

9)D

10)C

11)A

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