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					All of the following items are included in gross income except (Points: 5)
        alimony received.
        rent income.
        interest earned on a bank account.
        child support payments received.


2. Which of the following types of itemized deductions are included in the category of
miscellaneous expenses that are deductible only if the aggregate amount of such expenses
exceeds 2% of the taxpayer's adjusted gross income? (Points: 5)
        unreimbursed employee business expenses
        charitable contributions
        medical expenses
        home mortgage interest expense


3. Which of the following types of itemized deductions are included in the category of
miscellaneous expenses that are deductible only if the aggregate amount of such expenses
exceeds 2% of the taxpayer's adjusted gross income? (Points: 5)
        unreimbursed employee business expenses
        charitable contributions
        medical expenses
        home mortgage interest expense


4. The following information for 2010 relates to Emma Grace, a single taxpayer, age 18:
Salary$6,500
Interest income1,200
Itemized deductions 500
Compute Emma Grace's taxable income assuming she is self-supporting. (Points: 5)
        2,650
        5,150
        0
        2000


5. Kevin is a single person who earns $70,000 in salary for 2010 and has other income
from a variety of investments, as follows:
Bank savings account interest$5,500
State of Missouri Bonds3,500
Dividends from XYZ Corp.7,000

Kevin received refunds when he filed his 2009 tax returns in April of 2010. His federal
refund was $600 and his state refund was $300. Kevin's 2009 federal itemized deductions
totaled $13,000. In 2010 his itemized deductions total only $3,700, and the amount of
withholding for Federal income taxes is $16,900. (Points: 5)
        68,450
        70,540
        67,950
        73,450


6. Sarah receives a $15,000 scholarship from City University. The university specifies
that $8,000 is for tuition, books, supplies, and equipment for classes. The other $7,000 is
for room and board. Sarah works ten hours per week as a grader, for which she is paid
$7,500 for the year. Of the total amount received, Sarah must include the following
amount in gross income: (Points: 5)
        $7,000.
        $7,500.
        $14,500.
        $22,500.


7. In 2009 Bronwyn loaned her son, Juan, $10,000 to help him buy a new computer. In
2010, before he repaid the $10,000, Bronwyn told Juan that she was "tearing up" the
$10,000 note as a graduation present. How should Juan treat the amount forgiven?
(Points: 5)
        taxable income in year of loan
        taxable income in year of forgiveness
        excludable gift in year of loan
        excludable gift in year of forgiveness


8. For a taxpayer who is not insolvent nor under bankruptcy proceedings, the discharge of
debt is generally: (Points: 5)
        taxable.
        nontaxable
        partially taxable.
        none of the above.


9. In which of the following situations is the individual is an independent contractor
rather than an employee? (Points: 5)
        a nurse who is directly supervised by doctors in an office
       a computer programmer who is instructed as to what projects to undertake,
programming language and format, and hours of work
        a nurse who travels to several different patients. She sets her own hours and is
responsible for the delivery of nursing care and end result
         a teacher whose hours, classroom responsibilities, content and methods of
instruction are established by the school


10. Sarah incurred employee business expenses of $5,000 consisting of $3,000 business
meals and $2,000 customer entertainment. She provided an adequate accounting to her
employer's accountable plan and received reimbursement for one-half of the total
expenses. How much of the meals and entertainment will be deductible by Sarah without
consideration of the 2% of AGI limit? (Points: 5)
        $0
        $1,250
        $2,500
        $5,000


11. Juanita, who is single, is in an automobile accident in 2010 and her car sustains
$6,200 in damages. Because both drivers received tickets in the accident, Juanita does not
expect to recover any of the loss from her insurance company. Juanita's 2010 AGI is
$31,000, and she deducts a $3,000 loss on her 2010 tax return. Her other itemized
deductions in 2010 exceed $12,000. In 2011, Juanita's insurance company reimburses her
$2,800. Juanita's 2011 AGI is $28,000. As a result, Juanita must (Points: 5)
        amend 2010 to show a $200 loss.
        do nothing and simply keep the $2,800.
        do nothing to the 2010 return but report $2,800 of income on her 2011 return.
        amend the 2010 return to show $0 loss and file her 2011 return to show a $200
loss.


12. Constance, who is single, is in an automobile accident in 2010, and her car sustains
$6,200 in damages. Because both drivers received tickets in the accident, Constance does
not expect to recover any of the loss from her insurance company. Constance's 2010 AGI
is $31,000. Her casualty loss is $3,000; she has other itemized deductions of $1,200. In
2011, Constance's insurance company reimburses her $2,800. Constance's 2011 AGI is
$28,000. As a result, Constance must (Points: 5)
           amend the 2010 return to show the $200 loss.
           do nothing and simply keep the $2,800.
           amend the 2010 return to show $0 loss and file her 2011 return to show $200
loss.
           do nothing to the 2010 return but report $2,800 of income on her 2011 return.


13. In October 2010, Jonathon, an accrual-method taxpayer, remodels and renovates an
office building for Dale and bills him $30,000. Dale signs a note for the debt. Dale keeps
delaying payment and finally goes bankrupt in 2011. Jonathon will report (Points: 5)
           $0 income in both years.
           $30,000 income in 2010 and a bad debt deduction of $30,000 in 2011.
           $30,000 income in 2010 and a STCL of $30,000 in 2011 limited to $3,000 after
netting.
       $30,000 income in 2010 and then must amend his last year's return to show $0
income when he learns of the bankruptcy.


14. Drove 400 miles in his personal auto at 14 cents per mile. The travel was directly
related to services he performed for his church (actual costs were not available).
What is Don's charitable contribution deduction? (Points: 5)
           $2,456
           $3,156
           $3,356
           $3,656


15. Sidney purchased land in 2003 for $35,000 that she held as a capital asset. This year,
she contributed the land to the Boy Scouts of America for use as a site for a summer
camp. The market value of the land at the date of contribution is $40,000. Sidney's
adjusted gross income is $90,000. Assuming no special elections, Sidney's maximum
deductible contribution this year is (Points: 5)
           $13,000.
           $27,000.
        $35,000.
        $40,000.


16. Carol contributes a painting to a local museum for display. Her AGI is $60,000. Carol
paid $22,000 for the painting in 1990, but its market value at the date of the contribution
is $25,000. With no special elections, Carol's deductible contribution this year is (Points:
5)
        $ 7,000.
        $18,000.
        $22,000.
        $25,000.


17. To be tax deductible, an expense must be all of the following except (Points: 5)
        ordinary and necessary.
        paid in cash.
        reasonable in amount.
        an expense of the taxpayer.


18. Which of the following is not required for an expenditure to be deductible as a
business or investment expense? (Points: 5)
        recurring in nature
        ordinary and necessary
        reasonable in amount
        incurred by the taxpayer


19. Which of the following expenditures is tax deductible? (Points: 5)
        capital expenditures
        expenses related to tax-exempt income
        expenses related to a trade or business
        expenses that are illegal or in violation of public policy


20. Sanjay is single and has taxable income of $13,000 without considering the sale of a
capital asset in November of 2010 for $15,000. That asset was purchased six years earlier
and has a tax basis of $5,000. The tax liability applicable to only the capital gain is
(Points: 5)
         $0.
         $500.
         $1,000.
         $1,500.


21. To be considered a Section 1202 gain, the stock being sold must meet all of the
following characteristics except (Points: 5)
         the stock must be issued after August 10, 1993.
         the stock must be held more than five years.
         the corporation which issued the stock must be a C corporation.
        at least 50% of the value of the corporation's assets must be used in the active
conduct of one or more qualified trades or businesses.


22. Andrea died with an unused capital loss carryover of $3,300. The carryover (Points:
5)
         may be carried back three years.
         will be fully used on Andrea's final income tax return.
         will be inherited by Andrea's heirs.
         expires with death.


23. Healthwise Ambulance requires its employees to be on 24-hour call and consequently
gives them $800 per month housing allowance and a $200 per month food allowance.
Ron, an employee of Healthwise, receives a salary of $40,000 per year (this does not
include the allowances). Ron will be taxed each year on (Points: 5)
         $40,000.
         $42,400.
         $49,600.
         $52,000.


24. Which of the following item(s) must be included in the income of the respective
employees? (Points: 5)
         ABC Hospital Corporation provides free meals in the hospital cafeteria to
employees while on duty in order that they be available for emergency calls.
         The state of California highway patrol organization provides its officers with a
daily meal allowance to compensate them for meals eaten at any location while they are
on duty.
         IBX Corporation requires its employees to work overtime three evenings each
year when the company takes inventory. The corporation pays to provide catered dinners
on its premises on these evenings.
        More than one, but not all, of the amounts must be included in income.


25. Fatima's employer provides a child care center where her two children stay while she
works. She pays nothing for this service. If Fatima paid for comparable child care, it
would cost $7,200 a year. How much of the child care benefits are taxable to Fatima?
(Points: 5)
        $0
        $2,200
        $5,000
        $7,200


26. Ahmad's employer pays $10,000 in tuition this year for Ahmad to attend a graduate
business program. How much of the employer-provided tuition is taxable to Ahmad?
(Points: 5)
        $0
        $4,750
        $5,250
        $10,000


27. Carl filed his tax return, properly claiming the head of household filing status. Carl's
employer paid or provided the following to Carl:
Wages $65,000
Fair market value of qualified dependent care services 4,000
Premiums for $50,000 qualified group term life insurance 500
Medical insurance premiums 600
How much of this income should Carl report? (Points: 5)
        $65,000
        $69,000
        $69,500
         $70,100


28. In December 2010, Max, a cash basis taxpayer, rents an apartment to Kadeem. Max
receives both the first and last months' rent totaling $1,800 plus a security deposit of
$400. The amount of income reported as taxable in 2010 is: (Points: 5)
         $400.
         $1,300.
         $1,800.
         $2,200.


29. You may choose married filing jointly as your filing status if you are married and
both you and your spouse agree to file a joint return. Which of the following facts would
prevent you from being considered married for filing purposes? (Points: 5)
         You were married for several years, but your divorce became final in December.
         You are married but living apart until some problems can be solved.
          Your spouse died during the year but the executor of the estate has agreed to the
filing of a joint return.
         None of the above.


30. Tom and Alice were married on December 31 of last year. What is their filing status
for last year? (Points: 5)
         They file as single.
         They file as married joint or married separate.
         They file as single for half the year and married for the other half.
         They file as single for 364 days and married for one day.


31. When a spouse dies, the surviving spouse for the year of death: (Points: 5)
         may file a married filing jointly return.
         must file a tax return using the single filing status.
         must file a tax return using the head of household filing status.
         may file a married filing jointly return only if the death occurred in the last half
of the year.
32. Alex is a calendar year sole proprietor. He began business on December 1, this year.
He uses the accrual method of accounting. Alex had the following collections in
December. Collected $7,000 in December, from clients who paid cash for services to be
performed next year. Collected $5,000 in December, for services performed during
December; deposited in an operating account on December 31, this year. Collected
$12,000 in December; on accounts receivable for services performed in
December;deposited in operating account on January 2, next year. What is the amount
Alex must include in his income for December? (Points: 5)
        $7,000.00
        $12,000.00
        $17,000.00
        $24,000.00


33. Don's records contain the following information:
1. Donated stock having a fair market value of $3,600 to a qualified charitable
organization. He acquired the stock five months previously at a cost of $2,400.
2. Paid $700 to a church school as a requirement for the enrollment of his daughter.
3. Paid $200 for annual homeowner's association dues.
4. Drove 400 miles in his personal auto at 14 cents per mile. The travel was directly
related to services he performed for his church (actual costs were not available).
What is Don's charitable contribution deduction? (Points: 5)
        $2,456
        $3,156
        $3,356
        $3,656


34. Lindsay Corporation made the following payments to the family of Luke Marshall, an
employee who died during the year. $5,000 for Luke's final paycheck that he failed to
collect $10,000 for accrued vacation days as required by the employment contract
$25,000 for in admiration of Luke's outstanding service to the community. What is the
total amount that Luke's family must include in income? (Points: 5)
        $0
        $5,000
        $15,000
        $40,000


35. While certain income of a minor may now be taxed at the parent's tax rate,
discuss how income shifting may still be accomplished and any constraints that may
exist on income shifting. (Points: 5)

				
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