Question 1

During 2012, Trevor has the following capital transactions:   After the netting process, the following results:

Accepted Answer

A) Long-term collectible gain of $2,000. 
B) LTCG of $6,000, Long-term collectible gain of $2,000, and a STCL of $6,000. 
C) LTCG of $6,000, Long-term collectible gain of $2,000, and a STCL carryover to 2013 of $3,000. 
D) LTCG of $2,000. 
E) None of the above. 
A) Long-term collectible gain of $2,000. 
B) LTCG of $6,000, Long-term collectible gain of $2,000, and a STCL of $6,000. 
C) LTCG of $6,000, Long-term collectible gain of $2,000, and a STCL carryover to 2013 of $3,000. 
D) LTCG of $2,000. 
E) None of the above.

Question 2

During the year, Irv had the following transactions:
   How are these transactions handled for income tax purposes?

Accepted Answer

Ordinary loss of $7,000 on the business

Question 3

Kirby is in the 15% tax bracket and had the following capital asset transactions during 2012:   Kirby's tax consequences from these gains are as follows:

Accepted Answer

A) (5% ´ $10,000) + (15% ´ $13,000). 
B) (15% ´ $13,000) + (28% ´ $11,000). 
C) (0% ´ $10,000) + (15% ´ $13,000). 
D) (15% ´ $23,000). 
E) None of the above. 
A) (5% ´ $10,000) + (15% ´ $13,000). 
B) (15% ´ $13,000) + (28% ´ $11,000). 
C) (0% ´ $10,000) + (15% ´ $13,000). 
D) (15% ´ $23,000). 
E) None of the above.

Question 4

Homer (age 68) and his wife Jean (age 70) file a joint return.They furnish all of the support of Luther (Homer's 90-year old father), who lives with them.For 2012, they received $6,000 of interest income on city of Chicago bonds and interest income on corporate bonds of $48,000.Compute Homer and Jean's taxable income for 2012.

Accepted Answer

$22,400.Their gross income is $48,000 si

Question 5

Once they reach age 65, many taxpayers will switch from itemizing their deductions from AGI and start claiming the standard deduction.

Accepted Answer

A) True 
 B)False

Question 6

Sarah furnishes more than 50% of the support of her son and daughter-in-law who live with her.If the son and daughter-in-law file a joint return, Sarah cannot claim them as dependents.

Accepted Answer

A) True 
 B)False

Question 7

Under the Federal income tax formula for individuals, a choice must be made between claiming deductions for AGI and itemized deductions.

Accepted Answer

A) True 
 B)False

Question 8

In early 2012, Ben sold a yacht, held for 9 months and for pleasure, for a $5,000 gain.Concerned about offsetting the gain before year-end, Ben is considering selling one of the following-each of which would yield a $5,000 loss:
· Houseboat used for recreation.
· Truck used in business.
· Stock investment held for 13 months.
Evaluate each choice.

Accepted Answer

The sale of the houseboat produces no be

Question 9

A decrease in a taxpayer's AGI could decrease the amount of charitable contribution that can be claimed.

Accepted Answer

A) True 
 B)False

Question 10

For the current year, David has salary income of $80,000 and the following property transactions:   What is David's AGI for the current year?

Accepted Answer

A) $76,000. 
B) $77,000. 
C) $78,000. 
D) $89,000. 
E) None of the above. 
A) $76,000. 
B) $77,000. 
C) $78,000. 
D) $89,000. 
E) None of the above.

Question 11

Wilma, age 70 and single, is claimed as a dependent on her daughter's tax return.During 2012, she had interest income of $2,400 and $800 of earned income from baby sitting.Wilma's taxable income is:

Accepted Answer

A) $700. 
B) $850. 
C) $1,800. 
D) $2,250. 
E) None of the above. 
A) $700. 
B) $850. 
C) $1,800. 
D) $2,250. 
E) None of the above.

Question 12

Derek, age 46, is a surviving spouse.If he has itemized deductions of $12,100 for 2012, Derek should not claim the standard deduction.

Accepted Answer

A) True 
 B)False

Question 13

Roy and Linda were divorced in 2011.The divorce decree awards custody of their children to Linda but is silent as to who is entitled to claim them as dependents.If Roy furnished more than half of their support, he can claim them as dependents in 2012.

Accepted Answer

A) True 
 B)False

Question 14

Married taxpayers who file separately cannot later change to a joint return.

Accepted Answer

A) True 
 B)False

Question 15

Emma had the following transactions for 2012:
   What is Emma's AGI for 2012?

Accepted Answer

$158,000.$80,000 (salary) + $4,000 (alim

Question 16

Which, if any, of the following is a correct statement relating to the kiddie tax?

Accepted Answer

A) If the parents are divorced, the income of the noncustodial parent is used to determine the allocable parental tax. 
B) The components for the application of the kiddie tax are not subject to adjustment for inflation. 
C) If the kiddie tax applies, the parents must include the income of the child on their own income tax return. 
D) The kiddie tax does not apply if both parents of the child are deceased. 
E) None of the above. 
A) If the parents are divorced, the income of the noncustodial parent is used to determine the allocable parental tax. 
B) The components for the application of the kiddie tax are not subject to adjustment for inflation. 
C) If the kiddie tax applies, the parents must include the income of the child on their own income tax return. 
D) The kiddie tax does not apply if both parents of the child are deceased. 
E) None of the above.

Question 17

Warren, age 17, is claimed as a dependent by his father.In 2012, Warren has dividend income of $1,500 and earns $400 from a part-time job.

Accepted Answer

The answer of Warren, age 17, is claimed as a...

Question 18

Buddy and Hazel are ages 72 and 71 and file a joint return.If they have itemized deductions of $14,000 for 2012, they should not claim the standard deduction.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following taxpayers may file as a head of household in 2012? Ron provides all the support for his mother, Betty, who lives by herself in an apartment in Fort Lauderdale.Ron 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.Dan earned $4,200 in 2012 working at a fast food restaurant and is saving his money to attend college in 2013.Dan lives in Tammy's home.
Joe's wife left him late in December of 2011.No legal action was taken and Joe has not heard from her in 2012.Joe supported his 6-year-old son, who lived with him throughout 2012.

Accepted Answer

A) Ron only. 
B) Tammy only. 
C) Joe only. 
D) Ron and Joe only. 
E) Ron, Tammy, and Joe. 
A) Ron only. 
B) Tammy only. 
C) Joe only. 
D) Ron and Joe only. 
E) Ron, Tammy, and Joe.

Question 20

In terms of income tax consequences, abandoned spouses are treated the same way as married persons filing separate returns.

Accepted Answer

A) True 
 B)False

Exam 3: Computing the Tax

During 2012, Trevor has the following capital transactions: After the netting process, the following results:

During the year, Irv had the following transactions: How are these transactions handled for income tax purposes?

Kirby is in the 15% tax bracket and had the following capital asset transactions during 2012: Kirby's tax consequences from these gains are as follows:

Once they reach age 65, many taxpayers will switch from itemizing their deductions from AGI and start claiming the standard deduction.

Sarah furnishes more than 50% of the support of her son and daughter-in-law who live with her.If the son and daughter-in-law file a joint return, Sarah cannot claim them as dependents.

Under the Federal income tax formula for individuals, a choice must be made between claiming deductions for AGI and itemized deductions.

A decrease in a taxpayer's AGI could decrease the amount of charitable contribution that can be claimed.

For the current year, David has salary income of $80,000 and the following property transactions: What is David's AGI for the current year?

Wilma, age 70 and single, is claimed as a dependent on her daughter's tax return.During 2012, she had interest income of $2,400 and $800 of earned income from baby sitting.Wilma's taxable income is:

Derek, age 46, is a surviving spouse.If he has itemized deductions of $12,100 for 2012, Derek should not claim the standard deduction.

Roy and Linda were divorced in 2011.The divorce decree awards custody of their children to Linda but is silent as to who is entitled to claim them as dependents.If Roy furnished more than half of their support, he can claim them as dependents in 2012.

Married taxpayers who file separately cannot later change to a joint return.

Emma had the following transactions for 2012: What is Emma's AGI for 2012?

Which, if any, of the following is a correct statement relating to the kiddie tax?

Warren, age 17, is claimed as a dependent by his father.In 2012, Warren has dividend income of $1,500 and earns $400 from a part-time job.

Buddy and Hazel are ages 72 and 71 and file a joint return.If they have itemized deductions of $14,000 for 2012, they should not claim the standard deduction.

In terms of income tax consequences, abandoned spouses are treated the same way as married persons filing separate returns.

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Tax Credits and Payments

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 1

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 2

Property Transactions: Capital Gains and Losses, 1231, Recapture Provisions

Alternative Minimum Tax

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

S: Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

Income Taxation of Trusts and Estates

Filters