ACCT 553-Question 1.1.(TCO E) Interest, dividends, and annuities income are classified as __ 16 mcq and 10 long ques
Inventory for a locomotive
tax planning for nonprofit organizations
Arranging your affairs to keep your tax liability as low as possible under the tax law
The interest on U.S. Treasury bonds
Both Bob and Sam recognize $8,000 of taxable income.
severance pay for the cancellation of employment
generally deductible for tax purposes as business expenses
1. (TCO E) Betty Jones files a return as a single taxpayer. Items of income received by
Betty in 2011 were as follows.
Interest on savings account with Bank of America: $100
Interest on state income tax refund: $50
Gambling winnings: $4,800
Dividends from mutual life insurance company on life insurance policy: $1,000
Dividends from Better Auto Co. received on January 2, 2011: $875
The total dividends received on the life insurance policy do not exceed the aggregate of the premiums paid to the company.
(a) How much should Betty include in her 2011 taxable income as interest?
(b) How much should Betty report as dividend income for 2011?
(c) How much should Betty include in taxable “Other Income” for her state lottery winnings?
(Points : 17)
2. (TCO E) Distinguish between realized gains and losses and recognized gains and losses. (Points : 17)
3. (TCO F) When might a taxpayer prefer a sale over a like-kind exchange that would result in the nonrecognition of gain under Section 1031?(Points : 17)
4. (TCO G) What is “significant participation,” and why is it noteworthy?(Points : 17)
5.(TCO I) Amos, a single individual with a salary of $50,000, incurred and paid the following expenses during the year.
Medical expenses: $5,000
Casualty loss (after $100 floor): $1,000
State income taxes: $4,000
Moving expenses: $1,500
Contribution to a traditional IRA: $2,000
Student loan interest: $1,200
Analyze the above expenses and determine which ones are deductible for AGI. Please support your position. (Points : 17)
|Question 6.6.(TCO I) Kim had the following transactions for 2010.
What is Kim's AGI for 2010? (Points : 17)
|Question 7.7. (TCO F) Pam owns a sole proprietorship, and Kevin is the sole shareholder of a C (regular) corporation. Each business sustained a $16,000 operating loss and a $2,500 capital loss for the year. Evaluate how these losses will affect the taxable income of the two owners. (Points : 17)|
8.(TCO B) Dave forms a corporation and transfers property having a basis to him of $22,000 and a fair market value of $29,000 to the corporation for 1,000 shares of $11 par stock. One year later, Hank transfers property having a basis to him of $3,500 and a fair market value of $4,500 for 100 shares of the stock. Hank is not related to Dave. The corporation issued no other stock.
(a) How much gain does Dave recognize on his exchange? What is the basis to Dave of his 1,000 shares?
(b) What gain or loss is recognized by the corporation when it issues its shares to Dave? What is the basis to the corporation of the property it received from Dave?
(c) What is the gain or loss that Hank recognizes on this transaction, and what is his basis in his 100 shares?(Points : 17)
Question 9.9.(TCO F) XYZ Company had a net loss of $90,000 from operations in 2007. Tina owns XYZ and works 20 hours a week in the business. She has a large amount of income from other sources and is in the 33% marginal tax bracket. Would Tina's tax situation be better if XYZ were a proprietorship or a C corporation? Explain why. (Points : 17)
10.(TCO H) Alex Smith purchased 30 shares of XYZ stock on April 30, 2010 for $210, and on September 1, 2010, he purchased 90 additional shares for $900. On November 8, 2010, he sold 48 shares, which could not be specifically identified, for $528, and on December 15, 2010, he sold another 25 shares for $50. What is his recognized gain or loss? (Points : 17)
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