Docstoc

federal

Document Sample
federal Powered By Docstoc
					9.           Assume the same facts as in the previous question (again, ignore any
deduction that may relate to self-employment taxes). Katerina’sTaxable Income be
for 2010 will be:

      a.    $23,050
      b.   $25,050
      c.    $28,050
      d.   To answer this question we must know the amount of the sole
      proprietorship dividend in 2010

10.        Tawanda and Joseph are married taxpayers who file a joint
return. In 2009, they had AGI of $300,000 and their preliminary itemized
deductions totaled $20,000. In 2010, they will also have AGI of $300,000 and
preliminary itemized deductions of $20,000. Which of the following is TRUE?

      a.     When comparing their 2009 and 2010 returns, they will actually be able to
      deduct more itemized deductions on their 2010 return
      b.    When comparing their 2009 and 2010 returns, they will actually be able to
      deduct more itemized deductions on their 2009 return
      c.     When comparing their 2009 and 2010 returns, they will actually be able to
      deduct the same amount of itemized deductions on each return
      d.    They will not be allowed to actually deduct any itemized deductions on
      either their 2009 return or their 2010 return

17.        Which of the following expenditures is most likely
deductible from GROSS INCOME (i.e., for AGI or PRE-AGI)?

      a.    A spouse’s medical care expenses
      b.    An employee’s unreimbursed travel expenses (i.e., relating to her job)
      c.    Interest on the taxpayer’s student loan
      d.    ALL of the above items would be deducted PRE-AGI

18.        Kurt will have AGI of $70,000 in 2010. During 2010, Kurt will also have
an uninsured personal casualty loss of $5,000 (after the $100 reduction). The
personal casualty loss relates to an accident that Kurt had with Donny. Kurt
carried no collision insurance and Donny was also anuninsured motorist. Assume
that Kurt will itemize deductions in 2010. What is the casualty loss amount that
Kurt may actually deduct on his 2010 return?

             a.            $0
             b.            $4,900
             c.            $5,000
             d.            $7,000
21.        If Diego becomes insolvent with assets of $25,000 and liabilities of
$35,000 and one of the creditors cancels a debt of $15,000, what amount must Diego
recognize as income?

               a.          $0
               b.          $5,000
               c.          $10,000
               d.          $15,000


22.         NAIVIV Inc. paid all of the premiums for a $45,000 group-term life
insurance policy on its 28-year-old President, Anthony. Assume the annual cost per
$1,000 of coverage for a person aged 25 to 29 is $0.72. What amount relating to the
policy (if any) must be included in Anthony’s Gross Income?

          a.     $0
          b.     $0.72
          c.     $32.40
          d.     $45,000


23.        On January 1, 2010, Lorenza purchased an annuity for $40,000 from
AHIXZA FINANCIAL (an established insurance company). Under the annuity,
Lorenza will receive payments of $370 for each month for the remainder of her
life. Assume Lorenza is 59 years old. How much of the annuity payments may
be excluded from Lorenza’s 2010 Gross Income (assume all 12 monthly payments
were made in 2010)?

          a.     $0
          b.     $1,600
          c.     $2,840
          d.     $4,440



24.       Assuming the same facts as in the previous question, how much of the
annuity payments from AHIXZA FINANCIAL must be included in Lorenza’s 2010
Gross Income?

          a.     $0
          b.     $1,600
          c.     $2,840
          d.     $4,440
25.         In June 2010, Arlene, a calendar-year taxpayer, purchased business
equipment (7-year property) for $500,000. The property was immediately placed
into service (and is being used exclusively in Arlene’s extremely profitable
business). No other personal property will be purchased by Arlene in 2010. Arlene
wants to take the largest possible tax deduction in 2010 relating to the
equipment. Compute the largest tax deduction possible in 2010 for the equipment
(consider the Section 179 election and MACRS):

      a.    $71,428
      b.    $250,000
      c.    $285,714
      d.    $500,000


27.     During 2010, 5-year MACRS property was placed in service by Richanna, a
calendar-year taxpayer. Assume that Richanna does NOT make a Section 179
election. The property will most likely be depreciated over:

      a.    One calendar year
      b.    Two and ½ calendar years
      c.    Five calendar years
      d.    Six calendar years

28.    What is Cheryle’s 2010 Net Operation Loss assuming that she will have the
following items listed on her 2010 individual income tax return?
             Business Income                                $22,000
             Interest income on personal investments           2,000
             Less: Business Expenses                          46,000
             Less: Personal exemption                          3,650
             Less: Nonbusiness deductions                      3,000
             Loss shown on return                          $(28,650)

      a.    $46,000
      b.    $28,650
      c.    $24,000
      d.     $0
35.     Which of the following statements is TRUE about Shonnelle’s hobby
activity?

   a.     Shonnelle’s hobby activity would get reported on the Schedule C to her 1040
   b.     Expenses relating to Shonnelle’s hobby activity could be deductible
   c.     A loss from Shonnelle’s hobby activity will always be deductible in full
   d.     A loss from Shonnelle’s hobby activity could be used to offset wages from her
   full-time employment
       36.   Which of the following items paid for by Melody is MOST likely to be
       deductible as a medical expense?

                a.             Prescription pills purchased for her dependent
                b.             Over-the-counter skin lotion purchased at Walgreens
                c.             A bill for a cosmetic surgery
                d.             None of the above



       37.     What will Giovanni’s Taxable Income be for 2010? Assume she is single and
       will claim TWO dependent children (Patrick and Ryan). Assume further that
       Giovanni’s 2010 Adjusted Gross Income (“AGI”) will be $50,000 and that she will
       have itemized deductions of $15,000.

           a.        $50,000
           b.        $35,000
           c.        $27,700
           d.        $24,050




BACKGROUND INFORMATION FOR QUESTIONS 38-40
David, Dawn and Dian recently formed a corporation named 3D, Inc. (or “3D”). On December
31, 2009, 3D issued 400,000 shares of common stock to Dawn and 400,000 shares of common
stock to Dian. Dawn and Dian each paid $0.01 per share for their stock ($0.01 equaled the per
share fair market value on December 31, 2009). Their stock is subject to a 4-year “repurchase
option” (at cost) in favor of 3D. Each 3D repurchase option will “lapse” over time so that on
December 31 (for each of the next four years), 100,000 shares will be released from the
repurchase option. For example, if Dawn quits 3D before December 31, 2013, 3D can
repurchase Dawn’s “unvested shares” for $0.01 per share (no matter what the fair market value is
on that date).


QUESTION 38
Assume that Dawn DID file a timely “83(b) election.” On December 31, 2010, Dawn is still working
at 3D and thus 100,000 of Dawn’s 400,000 shares are “released” from the 3D repurchase option (i.e.,
100,000 of Dawn’s shares “vest” on December 31, 2010). On that same day, the fair market value of
the 3D stock is $1.01 per share. What 2010income, if any, must Dawn report as a result of these
events?

                a.             $0
                b.             $100,000
                c.             $101,000
               d.          $400,000


QUESTION 39
Assume that Dian did NOT file a timely “83(b) election.” On December 31, 2010, Dian is also still
working at 3D and thus 100,000 of Dian’ 400,000 shares are also “released” from the 3D repurchase
option (i.e., 100,000 of Dian’ shares “vest” on December 31, 2010). On that same day, the fair
market value of the 3D stock is $1.01 per share. What2010 income, if any, must Dian report as a
result of these events?

               a.          $0
               b.          $100,000
               c.          $101,000
               d.          $400,000

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:8
posted:4/10/2012
language:English
pages:5