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Study Resources (Accounting)

1) Expenses are deductible only if connected to trade or business or property held for the production of income. 2) A deduction will be allowed for an expenditure unless the Internal Revenue Code specifically disallows it. 3) Itemized deductions are deductions for AGI. 4) According to the tax formula, individuals can deduct the.
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101) Melanie, a single taxpayer, has AGI of $220,000 which includes $160,000 of salary and $60,000 of investment income.  She will pay Medicare tax on the $60,000 of investment income of A) $-0-. B) $2,280. C) $760. D) $870. 102) In the current year, ABC Corporation had the following items of income, expense, gains,.
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71) Tina purchases a personal residence for $278,000, but subsequently converts the property to rental property when its FMV is $275,000. Assume depreciation of $65,000 has been deducted after conversion to rental use. If Tina sells the property for $200,000, her realized gain or loss will be A) ($10,000) loss. B) ($13,000).
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21) The value of health, accident, and disability insurance premiums paid by an employer are generally not included in an employee's gross income. 22) Mattie has group term life insurance coverage of $120,000 provided by her employer on a nondiscriminatory basis. She must include premiums for $120,000 coverage in gross income.
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91) Bart operates a sole proprietorship for which he uses the accrual method of accounting. Bart's sister Samantha, a cash method taxpayer, did some advertising work for Bart's business in November 2013. In December, Bart received a billing statement from Samantha for $5,000. Bart paid Samantha the $5,000 in January.
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71) Which of the following item(s) must be included in the income of the respective employees? A) ABC Hospital Corporation provides free meals in the hospital cafeteria to employees while on duty in order that they be available for emergency calls. B) The state of California highway patrol organization provides its officers.
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81) Jeremy, an American citizen, earned $200,000 during 2013 while employed in Switzerland. Jeremy is entitled to the maximum foreign-earned income exclusion. Jeremy also incurred $40,000 of deductible expenses attributable to the foreign-earned income. Jeremy may deduct how much in expenses? A) $0 B) $19,520 C) $20,480 D) $40,000 82) Melanie, a U.S. citizen living.
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1) All recognized gains and losses must eventually be classified either as capital or ordinary. 2) In 2013, five different capital gain tax rates could apply to long-term capital assets sold by noncorporate taxpayers. 3) A taxpayer sells an asset with a basis of $25,000 to an unrelated party for $28,000. The.
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41) The term "principal place of business" includes a home office used by a taxpayer for administrative or management activities of the business if no fixed location exists where the taxpayer conducts these activities. 42) Generally, deductions for adjusted gross income on an individual's tax return include all the following types.
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81) Mike, a dealer in securities and calendar-year taxpayer, purchased a security for inventory on November 18, 2012 for $15,000. The FMV on December 31, 2012 was $16,000. The security was sold on December 19, 2013 for $16,500. These transactions result in A) $0 ordinary income in 2012; $1,500 ordinary income.
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11) Amounts withdrawn from Qualified Tuition Plans are tax-free if the amounts are used for qualified higher education expenses including tuition, fees, books, and room and board for students attending on at least a half-time basis. 12) Any distribution from a Qualified Tuition Plan not used for qualified higher education expenses.
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108) Chuck Corporation began operating a new retail business in the current year and had $500,000 of sales, $70,000 of which had not been collected by year-end. Total purchases were $350,000 on which $30,000 is still owed. Ending inventory is $60,000; operating expenses are $170,000, $50,000 of which is still.
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1) For individuals, all deductible expenses must be classified as deductions for AGI or deductions from AGI. 2) In 2013, medical expenses are deductible as a from AGI deduction to the extent that they exceed 7.5 percent of the taxpayer's AGI. 3) Medical expenses paid on behalf of an individual who could.
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61) Richard is a key employee of Winn Corporation. The corporation provides Richard with $120,000 of group-term life insurance coverage.  Only company executives receive life insurance coverage. The premium attributable to the coverage is $1,600. The uniform one-month group-term premium is one dollar per $1,000 of coverage. How much must.
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51) Which of the following statements regarding the qualified tuition plans (QTP) is incorrect? A) Distributions can be made tax-free to pay for room and board at college. B) Distributions made from the QTP for college tuition will be tax-free in addition to qualifying for the American Opportunity credit or lifetime learning.
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21) Self-employed individuals may deduct the full self-employment taxes paid as a for AGI deduction. 22) Finance charges on personal credit cards are considered interest and are, therefore, deductible. 23) In general, the deductibility of interest depends on the purpose for which the indebtedness is incurred. 24) Interest expense incurred in the.
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98) Adam purchased stock in 2006 for $100,000.  He is considering selling it in 2013.  It is currently worth $2,100,000 so he would realize a $2,000,000 gain.  Adam is in the top tax bracket.  Determine the taxes due under the following independent situations (ignore any additional Medicare taxes on investment.
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112) Ben is a well-known professional football quarterback.  His team's owners expect him to be a role model for young people.  Any endorsement contracts that he receives are based on his reputation.  In the current year, Ben is charged with assault.  Ben hires an attorney to represent him in this.
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118) Chen had the following capital asset transactions during 2013: Date acquiredDate soldBasisSales Price Sydney stock 2/5/20073/2/2013$ 5,000$  7,000 Lawrence stock 4/2/20045/1/2013 10,000  14,500 Collectibles 9/1/20089/1/2013      300    1,000 Autumn stock 1/2/20138/1/2013   6,700    5,500 What is the adjusted net capital gain or loss and the related tax due to the above transactions, assuming Chen has a 25%.
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61) Which of the following factors is important in distinguishing between capital and revenue expenditures? A) The expenditure improves the property, adding to the value of the property. B) The expenditure provides a betterment, adding to the value of the property. C) The expenditure restores the property. D) All of the above. 62) During 2013.
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11) Capital expenditures for medical care which permanently improve or better the taxpayer's property are deductible to the extent the cost exceeds the increase in fair market value to the property attributable to the capital expenditure. 12) Expenditures incurred in removing structural barriers in the home of a physically handicapped individual.
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113) Joy purchased 200 shares of HiLo Mutual Fund on July 15, 2009, for $10,500, and has been reinvesting dividends. On December 15, 2013, she sells 100 shares. AmountNo. of shares Purchase July 15, 2009$10,500200 Reinvested dividends, Oct 1, 201080010 Reinvested dividends, Oct 1, 201197020 Reinvested dividends, Oct 1, 2012       980   20 $ 13,250$250 What is.
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103) During the current year, Donna, a single taxpayer, reports the following items income of income and expenses: Income: Salary$86,000 Municipal bond interest1,300 Bank account interest2,300 Alimony received24,000 Capital gain on an asset held less than one year3,000 Rental income from residential rental house12,500 Expenses/losses: Interest on principal residence8,000 Real estate taxes on principal residence              1,000 Capital loss on an asset.
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109) Margaret, a single taxpayer, operates a small pottery activity in her spare time. During the current year, she reported the following income and expenses from this activity which is classified as a hobby: Revenue from sale of pottery$ 4,000 Depreciation on potter's wheel( 3,000) Property taxes on shed where she does.
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108) Lindsey Forbes, a detective who is single, operates a small pottery activity in her spare time. This year she reported the following income and expenses from this activity: Revenue from sale of pottery$ 9,000 Depreciation on potter's wheel( 3,000) Property taxes on shed where she does pottery( 1,200) Supplies used such as clay,.
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21) Business investigation expenses incurred by a taxpayer who is already involved in a similar business and who enters the new business are deductible currently. 22) Rachel has significant travel and entertainment expenses for her work, but she has not kept receipts.  She will be able to deduct a reasonable amount.
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