Question 1At one point in time, there was no cutback adjustment applicable to business meals. True False0.5 points   Question 2Transportation expenses are more broadly defined in the Code than are t

Question 1

1. At one point in time, there was no cutback adjustment applicable to business meals. True False

0.5 points   

Question 2

1. Transportation expenses are more broadly defined in the Code than are travel expenses. True False

0.5 points   

Question 3

1. Employees who render an adequate accounting to the employer and are fully reimbursed will still not avoid the 2 percent of AGI floor on such expenses. True False

0.5 points   

Question 4

1. The cost of a CPA review course is deductible as an education expense of an employee. True False

0.5 points   

Question 5

1. A room in a residence that is used both for personal and business cannot qualify for the office in the home deduction even if the business use predominates. True False

0.5 points   

Question 6

1. Richard owns a principal residence in New Orleans, a vacation lodge in Montana, and a yacht (with living quarters - cooking, sleeping, bathroom facilities) on the Mississippi River. All three properties have mortgages on which Richard pays interest. Qualified residence interest cannot include the interest paid on the mortgage covering the yacht. True False

0.5 points   

Question 7

1. If a taxpayer makes a contribution of ordinary income property, the amount of the deduction is equal to the basis usually of the property. True False

0.5 points   

Question 8

1. Tom pays half of the premiums related to coverage under his employer's group medical plan, and his employer pays the other half. No portion of the total premium is deductible as a medical expense by Tom. True False

0.5 points   

Question 9

1. Ina pays $320 to license her car, of which $280 is based on the value of the car. She can deduct $320 as an itemized deduction. True False

0.5 points   

Question 10

1. In no case may the cutback adjustment (on the itemized deductions) be more than 70 percent of the covered itemized deductions. True False

0.5 points   

Question 11

1. The realized gain or loss is the difference between the amount realized from a sale or other disposition and the property's adjusted basis. True False

0.5 points   

Question 12

1. The adjusted basis of property is not increased by the cost of repairs and maintenance to the property. True False

0.5 points   

Question 13

1. Gift property has a zero basis to the donee because the donee did not pay anything for the property. True False

0.5 points   

Question 14

1. The basis of inherited property is usually its fair market value on the date of the decedent's death. True False

0.5 points   

Question 15

1. Gains and losses on nontaxable exchanges are deferred because the tax law recognizes that nontaxable exchanges result in a change in the form but not the substance of the taxpayer's relative economic position. True False

0.5 points   

Question 16

1. Net long-term capital gains may be taxed at a lower rate than ordinary gains. True False

0.5 points   

Question 17

1. Corporate taxpayers carry unused capital losses, short-term or long-term, back 3 years and forward 5 years. True False

0.5 points   

Question 18

1. If Section 1231 losses exceed Section 1231 gains, the excess is treated as a short-term capital loss for an individual. True False

0.5 points   

Question 19

1. If depreciation taken on property subject to Section 1245 is more than the gain recognized from its sale, the entire depreciation is recaptured as ordinary income. True False

0.5 points   

Question 20

1. When Section 1239 (relating to the sale of depreciable property between related taxpayers) applies, it results in the entire gain being treated as Section 1231 gain. True False

0.5 points   

Question 21

1. John performs services for Paul.  Which, if any, of the following factors would help to verify John's status as an independent contractor (rather than as an employee):a.a.       John furnishes his own tools.b. b.       Paul specifies John's work schedule.c. c.       John is paid by the hour rather than for the job performed.d. d.       Paul tells John what to do and supervises his work.e. e.       None of the above.

1 points   

Question 22

1. Which, if any, of the characteristics listed below do not correctly reflect the concept of tax home:a.a.       The taxpayer need not be away from home for a 24-hour period to meet the "overnight" test.b. b.       The tax home will change if a temporary assignment elsewhere exceeds one year.c. c.       It is possible for some taxpayers never to be away from their tax home (i.e., the tax home follows them).d. d.       The tax home is the area where the taxpayer derives the principal source of income.e. e.       All of the above are correct.

1 points   

Question 23

1. Allowing for the cutback adjustment, which of the following trips, if any, will qualify for the travel expense deduction:a.a.       Myrna went on a two-week vacation in Boston. While there, she visited her employer's home office to have lunch with former co-workers.b. b.       Paul, a romance language high school teacher, spends summer break in France, Portugal, and Spain improving his language skills.c. c.       Dr. Brown, a surgeon, attends a two-day seminar on financial planning out of town.d. d.       Dr. Jones, a general dentist, attends a two-day seminar on dental implants out of town.e. e.       None of the above.

1 points   

Question 24

1. Which, if any, of the following is true regarding the deduction for moving expenses:a.a.       Meals during move subject to a 50 percent cutback.b. b.       Classification of deduction as deduction for AGI.c. c.       Distance test is 35 miles.d. d.       No longer allowed for self-employed persons.e..e.       None of the above.

1 points   

Question 25

1. Which, if any, of the following miscellaneous itemized deductions are not subject to the 2 percent floor:a.a.       Work uniforms (not suitable for street wear).b. b.       Union dues.c. c.       Gambling losses to the extent of gambling gains.d. d.       Home office expenses of an employee (the employer provides a regular office).e. e.       None of the above.

1 points   

Question 26

1. Irene is a resident of a state that imposes an income tax.  Information regarding Irene's state income tax transactions is as follows:Taxes withheld this year                                                    $5,400Refund received this year from overpayment  of last year's tax liability                                                     1,200Deficiency assessed for two years ago  (as a result of audit by the state)                                       2,000Interest on the deficiency                                                       300Both the two-year-old deficiency and interest thereon were paid by Irene this year.  If Irene elects to itemize her deductions this year, how much of the above transactions can be claimed?a.a.       $7,700b. b.       $7,430c. c.       $7,400d. d.       $6,230e. e.       None of the above.

1 points   

Question 27

1. During the current year, Horace paid the following interest charges:Home mortgage                                                                $3,600On loan to purchase household furniture                                 400On loan to purchase state of Nebraska  general purpose bonds (wholly tax-exempt)                           600If Horace itemizes his deductions from AGI for the current year, the amount deductible as interest expense is:a.a.       $4,600b. b.       $4,000c. c.       $3,600d. d.       $4,200e. e.       None of the above.

1 points   

Question 28

1. Which of the following items would be miscellaneous deductions, on Schedule A of Form 1040, if they exceed 2 percent of AGI?a.a.       Uniforms purchased by an employee for her job and not suitable for normal street wear.b. b.       Gambling losses (up to the amount of gambling winnings).c. c.       Medical Expenses.d. d.       Deductible moving expenses of an employee.e. e.       None of the above.

1 points   

Question 29

1. Which of the following items would be an itemized deduction, On Schedule A of Form 1040, not subject to the 2 percent of AGI floor?a.a.       Casualty and theft losses.b. b.       Appraisal fee paid to a valuation expert to determine the fair market value of art work donated to a qualified museum.c. c.       Professional dues paid by an accountant (employed by Ford Motor Co.) to the Institute of Management Accountants.d. d.       Job hunting costs.e. e.       None of the above.

1 points   

Question 30

1. David, a calendar year married taxpayer, files a joint return for 2017.  Information for the year includes the following:AGI (including wagering gains)                                                 $371,800State income taxes                                                                     15,000Charitable contributions                                                               16,000Wagering losses (wagering gains were $22,000)                           20,000David's allowable itemized deductions for the year are:a.a.       $51,000b. b.       $29,260c. c.       $49,260d. d.       $31,000e. e.       None of the above.

1 points   

Question 31

1. The bank forecloses on Lisa's apartment complex. The property had been pledged as security on a nonrecourse mortgage, whose principal amount at the date of foreclosure is $900,000.  The adjusted basis of the property is $500,000, and the fair market value is $900,000.  What is Lisa's recognized gain or loss?a.a.       0b. b.       <$500,000>c. c.       $400,000d. d.       <$900,000>e. e.       None of the above.

1 points   

Question 32

1. Khalid sells two personal use assets during the taxable year.  A gain of $3,000 is realized on the sale of one asset and a loss of $9,000 is realized on the sale of another asset.  What is his recognized gain or loss?a.a.       $0b. b.       <$9,000>c. c.       $3,000d. d.       <$6,000>e. e.       None of the above.

1 points   

Question 33

1. Gift property (disregarding any adjustment for gift tax paid by the donor):a.a.       Has the same basis to the donee as the donors adjusted basis if the donee disposes of the property at a loss, and the fair market value on the date of gift was less than the donor's adjusted basis.b. b.       Has no basis to the donee if the fair market value on the date of gift is less than the donor's adjusted basis.c. c.       Has no basis to the donee because he or she did not pay anything for the property.d. d.       Has the same basis to the donee as the donor's adjusted basis if the donee disposes of the property at a gain.e. e.       None of the above.

1 points   

Question 34

1. If a like-kind exchange, if boot received is greater than the realized gain:a.a.       No gain or loss is recognized.b. b.       Loss is recognized to the extent of the excess of the boot received over the realized gain.c. c.       Gain is recognized to the extent of the realized gain.d. d.       Gain is recognized to the extent of the boot received.e. e.       None of the above.

1 points   

Question 35

1. Which of the following qualify as replacement property under Section 1033 (nonrecognition of gain from an involuntary conversion)? (Taxpayer owns the building)1.       An office building occupied by the taxpayer that was destroyed by a fire is replaced with a warehouse which is to be used to store taxpayer's inventory.2.       A shopping center leased to various retail tenants is destroyed by a tornado.  The shopping center is to be replaced with a warehouse which is to be leased to various tenants.3.       An office building occupied by the taxpayer is condemned.  The building is to be replaced with a warehouse which is to be leased to various tenants.a.a.       1b. b.       2c. c.       3d. d.       1 and 3e. e.       2 and 3

1 points   

Question 36

1. Which of the following are capital assets?a.a.       Investment property held by a trade or business.b. b.       Inventory.c. c.       Certain copyrights, literary or musical compositions held by the person whose efforts created the property.d. d.       Accounts receivable associated with the sale of inventory.e. e.       None of the above.

1 points   

Question 37

1. Bea has the following capital gains and losses this year:LTCG           $15,000                                                                                       STCG $15,000LTCL            $10,000                                                                                       STCL  $ 5,000What are Bea's net long-term and short-term gains?a.a.       NSTCG = $30,000 NLTCG = $ 0b. b.       NLTCG = $ 5,000 NSTCG = $10,000c. c.       NLTCG = $ 5,000 NSTCG + $15,000                                          d. d.       NLTCG = $15,000 NSTCG = $15,000e. e.       None of the above

1 points   

Question 38

1. For this year, Wilma is a single individual whose taxable income puts her into the 33% bracket. Wilma's taxable income includes so much long-term capital gain that her ordinary taxable income is not large enough to get her out of the 15% bracket.a.a.       All of Wilma's long-term capital gain will be taxed at 15%.b. b.       Some of Wilma's long-term capital gain will be taxed at 33%.c. c.       Some of Wilma's long-term capital gain will be taxed at 0% as long as the gain is not taxed at the special rates for certain 1250 real estate or collectibles.d. d.       Wilma is not eligible for the alternative tax on long-term capital gains.e. e.       None of the above.

1 points   

Question 39

1. Orange, Inc. buys a sandwich-making machine for $35,000 on April 1, this year.  The machine is used in Orange's business.  As of December 31, this year, the machine is classified as:a.a.       A capital asset.b. b.       A Section 1231 asset.c. c.       A casualty asset.d. d.       An ordinary asset.e. e.       None of the above.

1 points   

Question 40

1. Alice owns nonresidential rental real estate which was purchased in 1985.  Straight-line depreciation was used on the asset. The property is sold at a $150,000 gain this year. The initial characterization of the gain is:a.a.       Section 1245 gain.b. b.       Section 1250 gain.c. c.       Section 1231 gain.d. d.       Section 179 gain.e. e.       None of the above.

1 points   

Question 41

1. MACRS means modified accelerated cost recovery system. True False

0.5 points (Extra Credit)   

Question 42

1. A professor living in San Diego (with a home there) and with a one-year contract at CSU-SB could most likely, under IRS rules, regard the appointment as temporary and deduct expenses of staying overnight in San Bernardino. True False

0.5 points (Extra Credit)   

Question 43

1. A medical doctor at a continuing medical education seminar in Orlando from his Anchorage home could most likely deduct the cost of the seminar and the travel to and from it and lodging. True False

0.5 points (Extra Credit)   

Question 44

1. The threshold for cutback of itemized deductions (the phaseout) is based on AGI but is not adjusted for inflation. True False

0.5 points (Extra Credit)   

Question 45

1. Code section 1231 often (barring non-recaptured 1231 losses) gives the best of both worlds: capital gain and ordinary loss. True False

0.5 points (Extra Credit)   

Question 46

1. The Soliman case, regarding home offices, was repealed by legislative changes to I.R.C. 280A. True False

0.5 points (Extra Credit)   

Question 47

1. Under the current tax law, the self-employed health insurance premium deduction:a.a.       Is deductible above-the-line.b. b.       Is 100% deductible.c. c.       Was only deductible on Schedule A if not fully deductible above-the-line.d. d.       All of the above.e. e.       None of the above.

1 points (Extra Credit)   

Question 48

1. The Taxpayer Relief Act of 1997 (changing treatment of the sale of principal residences)a.a.       Changed the Section 121 exclusion.b. b.       Repealed the Residential Rollover (Section 1034).c. c.       Both of the above.d. d.       Neither A nor B.

1 points (Extra Credit)   

Question 49

1. The taxpayer was permanently transferred from Denver to New York City and incurred the following expenses:House-hunting trip (including $400 for meals)                               $1,000Temporary living expenses for 20 days   (including $500 for meals)                                                          1,000Travel expense during move   (including $300 for meals                                                            1,000Moving company's charges                                                           4,000Brokers fee on sale of home                                                          4,000  $11,00049.     If the above move occurred this year, the deduction would be:a.a.       Zerob. b.       $4,700c. c.       $7,940d. d.       $5,000e. e.       None of the above

1 points   

Question 50

1. If the above move occurred this year and the employer reimbursed the employee for all expenses:a.a.       The deductible portion of the expenses reimbursed is excludible.b. b.       The entire reimbursement is excluded from income.c. c.       The deductible portion of the expenses reimbursed is includible.d. d.       None of the above

1 points   

Question 51

1. During this year, T, who is under 65, paid the following expenses:Medical                                                                             $5,000City assessment for repaving the street  where T's residence is located                                              800Qualified residence interest                                                 3,600State income tax                                                                 2,000T's adjusted gross income is $40,00051.     T's medical deduction would be:a.a.       $5,000b. b.       $2,000c. c.       $1,000d. d.       Zeroe. e.       None of the above

1 points   

Question 52

1. The amount of the city assessment included in the itemized deductions is.a.a.       It dependsb. b.       $800c. c.       Zerod. d.       None of the above

1 points   

Question 53

1. T's total itemized deductions based on the above information are:a.a.       $11,400b. b.       $4,600c. c.       $7,600d. d.       $6,600

1 points   

Question 54

1. X Corporation exchanged a warehouse located in New York for a warehouse located in New Jersey.  The adjusted basis of the New York warehouse was $30,000.  The fair market value of the New Jersey warehouse just prior to the exchange was $25,000.  In addition to the warehouse, X Corporation also received $8,000 in cash.54.     The amount realized by X Corporation is:a.a.       $8,000b. b.       $33,000c. c.       $25,000d. d.       Zeroe. e.       None of the above

1 points   

Question 55

1. The gain realized by X Corporation is:a.a.       $5,000b. b.       Zeroc. c.       $3,000d. d.       None of the above

1 points   

Question 56

1. The gain recognized by X Corporation on the exchange is:a.a.       $8,000b. b.       $3,000c. c.       Zerod. d.       None of the above

1 points   

Question 57

1. The basis for X Corporation in the property received, the warehouse in New Jersey, is:a.a.       $33,000b. b.       $30,000c. c.       $25,000d. d.       None of the above

1 points   

Question 58

1. On August 5, this year, taxpayer (who is under age 55) sells his principal residence with an adjusted basis of $65,000 for $175,000.  He pays $10,500 in commissions and $1,200 in legal fees in connection with the sale.  One month before the sale, taxpayer painted the house at a cost of $1,500 and repaired various items at a cost of $2,500.  On August 15, this year, taxpayer purchases a new home for $125,000.  The taxpayer owned the sold principal residence for more than five years and lived in it for more than two years just prior to the sale.58.     The amount realized on the sale of this house is:a.a.       $175,000b. b.       $164,500c. c.       $163,300d. d.       Zeroe. e.       None of the above

1 points   

Question 59

1. The gain realized on the sale of the above house is:a.a.       $98,300b. b.       $99,500c. c.       $110,000d. d.       None of the above

1 points   

Question 60

1. The "adjusted basis" of the old residence for taxpayer is:a.a.       $175,000b. b.       $163,300c. c.       $161,800d. d.       $159,300e. e.       None of the above

1 points   

Question 61

1. The recognized gain on the sale of the old principal residence is:a.a.       Zerob. b.       $34,300c. c.       $98,300d. d.       $50,000e. e.       None of the above

1 points   

Question 62

1. The basis of the new residence acquired is:a.a.       $54,000b. b.       $61,000c.  c.       $98,300d. d.       $125,000e. e.       None of the above

1 points   

Question 63

1. A business machine, which cost $10,000 two years ago, was sold on January 1, this year, for $19,000.  Depreciation was as follows for the calendar-year taxpayer:Actual Depreciation                     Straight-line Would Allowed and Allowable         Have Been   Two years ago           $1,429                                             $1,000Last year                     2,449                                               2,000This year                        875       500$4,753                                             $3,50063.     The adjusted basis of the property sold is:a.a.       $5,247b. b.       $6,500c. c.       $10,000d. d.       None of the above

1 points   

Question 64

1. The gain realized and recognized on the sale is:a.a.       $9,000b. b.       $12,500c. c.       $13,753.      d. d.       $19,000e. e.       None of the above

1 points   

Question 65

1. The character or nature of the gain realized and recognized is:a.a.       All ordinary incomeb. b.       All capital gainc. c.       $4,753 ordinary income, $9,000 1231 capital gaind. d.       $3,500 ordinary income, $9,000 1231 capital gaine. e.       None of the above

1 points   

Question 66

1. Eighteen-year ACRS nonresidential real property owned by an individual has accumulated accelerated depreciation of $975,000 at January 1, of this year.  This property is sold on January 1, this same year.  The original cost of the property was $975,000.  The sale price was $1,000,000.66.     The amount of the realized and recognized gain is:a.a.       $60,000b. b.       $150,000c. c.       $175,000d. d.       $1,000,000e. e.       None of the above

1 points   

Question 67

1. The character or nature of the gain realized and recognized is:a.a.       All ordinary gainb. b.       All capital gainc. c.       $105,000 capital gain, $70,000 ordinary incomed. d.       $25,000 capital gain, $975,000 ordinary incomee. e.       None of the above

1 points   

Question 68

1. If the property had been depreciated using the straight-line method, which of the answers to question 67 would now be correct?a.a.       All ordinary gainb. b.       All capital gainc. c.       $105,000 capital gain, $70,000 ordinary incomed. d.       $25,000 capital gain, $975,000 ordinary incomee. e.       None of the above

1 points   

Question 69

1. The half-year conventions used by the ACRS rules and the MACRS rules are the same. True False

0.5 points   

Question 70

1. Under MACRS rules, a mid-quarter convention is required if more than 40% of the value of personal property is placed in service during the fourth quarter of the year. True False

0.5 points   

Question 71

1. For personal property placed in service after December 31, 1992, the S 179 maximum deduction is limited to $17,500. True False

0.5 points   

Question 72

1. The more-than 50% business use only test applies to passenger automobiles. True False

0.5 points   

Question 73

1. The Alternate Depreciation System (ADS) is used to calculate depreciation for AMT. True False

0.5 points   

Question 74

1. Acquired goodwill is amortized over a 15-year period, with a half-year convention. True False

0.5 points   

Question 75

1. 75-76. Polly purchased a new factory building in April, 5 years ago for $5,000,000. On March 3, this year, the building was sold.75.     To calculate the cost recovery in the year of disposition, the percentage from the table must be multiplied by:a.a.       2b. b.       1c. c.       2.5 over 12d. d.       3.5 over 12e. e.       None of the above

1.75 points   

Question 76

1. The allowable cost recovery in the year of disposition is:a.a.       $26,708b. b.       $33,073c. c.       $66,146d. d.       $396,876e. e.       None of the above

1.75 points   

Question 77

1. 77-78. Rocky bought 7-year class property on January 4, this year, for $120,000. Assume his business income is $6,000 before the deduction for the Section 179 expense.77.     The amount of the currently deductible 179 expense is:a.a.       $4,000b. b.       $6,000c. c.       $10,000d. d.       None of the above

1.75 points   

Question 78

1. The MACRS table percentage (if the table is to be used) which would be applied to the remaining basis of the asset to calculate cost recovery in the first year (in addition to the 179 expense) is:a.a.       .1429b. b.       0c. c.       .20d. d.       None of the above