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Study Resources (Accounting)

51) Emma owns a small building ($120,000 basis and $123,000 FMV) and equipment ($35,000 basis and $22,000 FMV). Both assets were acquired three years ago, are used in Emma's business, and are depreciated using straight-line depreciation. Both are destroyed by fire. Insurance proceeds were equal to their FMVs. Only one.
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31) Research expenses eligible for the research credit include costs that are incident to the development or improvement of a product or component. 32) The earned income credit is refundable only if a tax has been withheld. 33) The earned income credit is available only to taxpayers with qualifying children. 34) If an.
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11) Generally, an income tax return covers an accounting period of 12 months. 12) A subsidiary corporation filing a consolidated return with its parent corporation must change its accounting period to conform with its parent's tax year. 13) The final tax return of Marjorie, a single taxpayer on the calendar basis, who.
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21)  Taxpayers with income below phase-out amounts are allowed a child credit of $1,000 for each qualifying child under age 17. 22) Qualified tuition and related expenses eligible for the American Opportunity Tax Credit are limited to those incurred the first two years of postsecondary education. education. 23) Brad and Shelly's daughter is.
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11) If realized gain from disposition of business equipment exceeds total depreciation or cost recovery, a portion of the gain will receive Sec. 1231 treatment if the equipment's holding period is more than one year. 12) The purpose of Sec. 1245 is to eliminate the advantage taxpayers would have if they.
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94) Jacqueline dies while owning a building with a $1,000,000 FMV. The building is classified as Sec. 1245 property acquired in 1985 for $850,000. Cost-recovery deductions of $850,000 have been claimed. Pam inherits the property. a.What is the amount of Pam's basis in the property? b.What is the amount of cost-recovery deductions.
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1) The present AMT applies to individuals, corporations, estates, and trusts. 2) The alternative minimum tax applies to individuals only if it exceeds the taxpayer's regular income tax liability. 3) For purposes of the AMT, the standard deduction, but not the personal and dependency exemptions, is allowed. 4) An example of an AMT.
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86) On June 1, 2010, Buffalo Corporation purchased and placed in service 7-year MACRS tangible property costing $100,000. On November 10, 2013, Buffalo sold the property for $102,000 after having taken MACRS $47,525 in depreciation deductions. What is the amount and character of Buffalo's gain? 87) An unincorporated business sold two.
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98) What is the significance of the Thor Power Tool Co. case? 99) Xerxes Manufacturing, in its first year of operations, produces solar panels which are sold through large building supply and home improvement stores. Xerxes' year-end results include the following: Office rent and utilities$15,000 Salaries of office staff100,000 Salaries of factory workers500,000 Direct materials.
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94) Marinda exchanges an office building worth $800,000 (basis is $820,000) for a warehouse worth $850,000.  A part of the exchange she also transfers $50,000 worth of securities which she purchased for $40,000.  a. What are Marinda's realized and recognized gains (losses) on the two assets exchanged? b. What is Marinda's.
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103) Amber receives a residence ($750,000 FMV, $500,000 adjusted basis) owned for eight years by Jonathan, her former spouse, as part of a divorce settlement. Amber and Jonathan had lived in the home for the four years before the divorce. Seven months after the transfer of the residence, Amber sells.
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41) Reva and Josh Lewis had alternative minimum taxable income of $350,000 in 2013 and file a joint return. For purposes of computing the alternative minimum tax, their exemption is A) $31,775. B) $51,900. C) $49,025. D) $80,800. 42) In computing AMTI, tax preference items are A) excluded. B) added only. C) subtracted only. D) either added or subtracted. 43).
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99) Kareem's office building is destroyed by fire on April 11, 2013.  Settlement is reached with the insurance company on November 1, 2013 when he receives a check for $900,000.  The property had recently been appraised for $920,000.  Kareem's adjusted basis in the building was $800,000.  a.What is Kareem's realized.
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86) On May 1, 2008, Empire Properties Corp., a calendar year taxpayer, purchased an apartment building for $1,000,000, of which $400,000 was allocable to the land. The corporation sold the property this year on September 23, 2013. a.What was the corporation's depreciation for the building, using statutory percentages under MACRS for.
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41) Interest is not imputed on a gift loan between two individuals totaling $100,000 except when the borrowed funds are used to purchase income-producing property. 42) In general, a change in accounting method must be approved by the IRS. 43) A new business is established.  It is not a seasonal business.  All.
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82) On June 30, 2013, Temika purchased office furniture costing $259,000 and computers with a cost of $400,000. She uses Sec. 179. Her business income is $900,000 without considering Sec. 179. How should she allocate the 179 election in order to maximize her total cost recovery deductions (depreciation and Sec..
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51) John has $55,000 net earnings from a sole proprietorship. John is also employed by a major corporation and is paid $25,000. John's self-employment tax (rounded) for 2013 is A) $3,886. B) $4,208. C) $7,771. D) $8,415. 52) Joe has $130,000 net earnings from a sole proprietorship. Joe's self-employment tax (rounded) for 2013 is A) $17,581. B).
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90) Julie sells her manufacturing plant and land originally purchased in 1980. Accelerated depreciation had been taken on the building, but the building is now fully depreciated. Julie is in the 39.6% marginal tax bracket. Other information is as follows: PropertyOriginal costTotal depreciationAdjusted basis              Selling price Plant              $2,800,000              $2,800,000$0$3,000,000 Land              $   500,000$500,000$800,000 She has.
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31) Installment sales of depreciable property which result in recaptured income under Secs. 1245 or 1250 require that the recaptured income be recognized in the year of sale. 32) Costs of tangible personal business property which are expensed under Sec. 179 are subject to recapture if the property is converted to.
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51) Which of the following statements regarding UNICAP is incorrect? A) The UNICAP rules result in more costs being included in inventory for tax purposes than for financial accounting. B) Taxpayers with gross receipts averaging more than $10,000,000 or more for the prior three years must apply the UNICAP provisions. C) Interest.
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76) Lucy, a noncorporate taxpayer, experienced the following Section 1231 gains and losses during the years 2008 through 2013. Her first disposition of a Sec. 1231 asset occurred in 2008.  Assuming Lucy had no capital gains and losses during that time period, what is the tax treatment in each of.
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21) In an involuntary conversion, the basis of replacement property is its cost reduced by the gain deferred. 22) A taxpayer may elect to defer recognition of a loss resulting from an involuntary conversion. 23) If the threat of condemnation exists and the taxpayer has reasonable grounds to believe that the property.
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31) The uniform capitalization rules (UNICAP) require the capitalization of some overhead costs that are expensed for financial accounting purposes. 32) Many taxpayers use the LIFO method of inventory valuation because during inflationary periods, LIFO normally results in the lowest inventory value and hence the lowest taxable income. 33) A taxpayer may.
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81) Elaine owns equipment ($23,000 basis and $15,000 FMV) and a building ($136,000 basis and $148,000 FMV), which are used in her business. Elaine uses straight-line depreciation for both assets, which were acquired several years ago. Both the equipment and the building are destroyed in a fire, and Elaine collects.
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51) Rosa exchanges business equipment with a $60,000 adjusted basis for a like-kind piece of equipment with a $100,000 FMV and $20,000 of marketable securities. What is Rosa's basis for the new equipment? A) $60,000 B) $80,000 C) $100,000 D) $120,000 52) If there is a like-kind exchange of property between related parties, how long.
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11) Self-employed individuals are subject to the self-employment tax if their net earnings are more than the personal exemption amount. 12) One-half of the self-employment tax imposed is allowed as a for AGI deduction. 13) If an individual is an employee and also has self-employment income, the maximum tax base for computing.
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