13 Jan (TCO 3) Joe’s automobile

ACCT324 Week 1 Discussion 1 & 2 Latest 2017 May

dq 1

Federal Tax System (graded)

What is the purpose of the federal tax system? How is the federal tax system organized? Who runs the federal tax system, and how do they operate?

dq 2

Tax Advice (graded)

A client comes to your tax firm. She asks you to research a tax issue and advise her on how to reduce her exposure to an IRS audit. What resources would you use in your research, and what would your advice be?

ACCT324 Week 2 Discussion 1 & 2 Latest 2017 May

dq 1

Income Inclusions and Exclusions (graded)

Identify one item of income that is included on gross income and one item of income that is excluded from gross income. Why are certain items excluded from gross income?

dq 2

Cash Method Versus Accrual Method (graded)

Why is the cash method usually used for computing taxable income? What is the accrual method for computing taxable income? When would the accrual method be used, and why?

ACCT324 Week 3 Discussion 1 & 2 Latest 2017 May

dq 1

Adjustments to Gross Income (graded)

What is the composition of adjusted gross income? What deductions are included in determining adjusted gross income, and where would you find them on an individual income tax return?

dq 2

Business Versus Personal Expenses (graded)

What are the criteria for a trade or business deduction? How is a trade or business deduction substantiated? Please give an example of a trade or business deduction.

ACCT324 Week 4 Discussion 1 & 2 Latest 2017 May

dq 1

Deductions for Individuals (Employees and Self Employed) (graded)

Let us begin with an overall review of itemized deductions. Itemized deductions are listed on Form Schedule A and flow through to the second page of Form 1040. Please describe and give an example of an itemized deduction that an individual is qualified to take. Deductions for employees are based on whether the expense is reimbursed or unreimbursed. How are unreimbursed expenses incurred by an employee reported on a tax return? Where are expenses for a self-employed individual reported on the tax return?

dq 2

Home Office Deduction (graded)

In order to take the home office deduction, there are various requirements that must be met. What are they, and why do you feel they are in place? In addition, employees must meet an additional requirement. What is it, and why is it in place? What are the requirements under the new safe harbor rule to deduct the office at home?

ACCT324 Week 5 Discussion 1 & 2 Latest 2017 May

dq 1

AMT: Fair or Punitive? (graded)

What is the AMT? What is the purpose of the AMT? Do you think that the AMT currently promotes fairness?

dq 2

Credits! (graded)

What is the purpose of personal tax credits? Please describe one of the personal tax credits. Why do you think a credit is given for some expenditures but not others?

ACCT324 Week 6 Discussion 1 & 2 Latest 2017 May

dq 1

Property Exchanges = Tax! (graded)

What types of property exchanges are taxable? Why do you think they are taxable? Is there an economic benefit to a taxable property exchange?

dq 2

Property Exchanges = No Tax! (graded)

What types of property exchanges are nontaxable? Why do you think they are nontaxable? Is there an economic benefit to a nontaxable property exchange?

ACCT324 Week 7 Discussion 1 & 2 Latest 2017 May

dq 1

Capital Gains (graded)

What are capital gains and losses? How are the capital gains and losses determined? How are capital gains taxed? What is the purpose behind Congress taxing capital gains at a rate lower than ordinary income?

dq 2

Recapture (graded)

What doesrecapture refer to? What is the effect of recapture, and how do you treat recapture? At what rate would you tax the recapture (i.e., ordinary or capital gains), and why?

ACCT324 Week 1 Quiz Latest 2017 May

1. Question :

(TCO 1) Which, if any, of the following would tend to decrease the ad valorem tax on real estate?

An abandoned church building is sold to a restaurant chain.

A tax holiday issued to a manufacturing plant expires.

An office building is converted into condominium units to be sold to senior citizens.

A portion of a city park is sold to a car dealership.

None of the above

Question 2. Question :

(TCO 1) Characteristics of a national sales tax include which of the following?

Like the VAT, it is levied on the producer rather than the consumer.

It is not intended as a replacement for the income tax.

As adopted by Russia, it is proving to be very successful.

In terms of taxpayer compliance, it is easier to evade than the VAT.

None of the above

Question 3. Question :

(TCO 1) Federal tax legislation generally originates in what body?

Internal Revenue Service

Senate Finance Committee

House Ways and Means Committee

Senate floor

None of the above

Question 4. Question :

(TCO 8) State income taxes generally can be characterized by _____.

a lack of withholding procedures

a different date for filing than the federal income tax

allowance of a deduction for federal income taxes paid

a deduction (or a credit) for personal and dependency exemptions

None of the above

Question 5. Question :

(TCO 8) During the current tax year, James had the following transactions.

Salary $70,000

Interest income on Xerox bonds 2,000

Inheritance from aunt 40,000

Contribution to traditional IRA 5,500

Capital losses 2,500

Esther’s AGI is:_____

$62,000.

$64,000.

$67,000.

$102,000.

$104,000.

Question 6. Question :

(TCO 8) Troy and Edie are married and under 65 years of age. During 20X2, they furnish more than half of the support of their 18-year-old daughter, Jobeth, who lives with them. Jobeth earns $15,000 from a part-time job, most of which she sets aside for future college expenses. Troy and Edie also provide more than half of the support of Troy’s cousin who does not live with them. Edie’s father, who died on January 3, 20X2 at the age of 80, has for many years qualified as their dependent. How many personal and dependency exemptions should Troy and Edie claim?

Two

Three

Four

Five

None of the above

Question 7. Question :

(TCO 8) A qualifying child cannot include _____.

a nonresident alien

a married son who files a joint return

a cousin

a daughter who is away at college

a grandson who is 28 years of age and disabled

Question 8. Question :

(TCO 9) What are pitfalls in interpreting the Internal Revenue Code?

Defining clauses too carefully

Giving more weight to certain language of the code section than what was intended

Missing cross-referenced but interrelated sections

All of the above

None of the above

Question 9. Question :

(TCO 11) In § 212(1), the number (1) stands for the _____.

section number

subsection number

paragraph designation

subparagraph designation

None of the above

Question 10. Question :

(TCO 12) Which of the following is characteristic of the IRS audit procedure?

The percentage of individual income tax returns that the IRS audits has significantly increased over the years.

An office audit takes place at the office of the taxpayer.

One of the factors that leads to an audit is the information provided by informants.

Only IRS special agents can conduct field audits.

None of the above

ACCT324 Week 2 Quiz Latest 2017 May

Question : 1

(TCO 2) On June 30, 20X2, Jill, a cash basis taxpayer, gave Tina a bond with a $25,000 face amount that pays $2,500 interest each December 31. When Tina collected the interest on December 31, 20X2, _____.

Jill must include all of the interest in her gross income

Tina must include all of the interest in her gross income

Jill must report $1,250 interest income, and Tina must report $1,250 interest income

Jill must recognize $1,250 of interest income at the time of the gift

Tina must recognize $25,000 of income at the time of the gift

Question 2. Question :

(TCO 3) Roger, age 19, is a full-time student at State College and a candidate for a bachelor’s degree. During 20X2, he received the following payments.

State scholarship for 10 months (tuition and books) $3,600

Loan from college financial aid office $1,500

Cash support from parents $3,000

Interest on CDs $1,700

Cash prize awarded in contest $500

What is Roger’s adjusted gross income for 20X2?

$1,700

$2,200

$5,800

$10,300

None of the above

Question 3. Question :

(TCO 3) Determine which statements are true given the following information.

Floral Company owed $100,000 to the National Bank.

If Floral transfers land with a cost of $60,000 in payment of the debt, then Floral must recognize $40,000 income.

If Floral pays the bank $60,000 in settlement of the liability, then Floral has $40,000 income from discharge of indebtedness.

If Floral pays the bank $60,000 in settlement of the liability and Floral is insolvent, then Floral can elect to reduce its basis in assets by $40,000 (in lieu of recognizing $40,000 gain).

I, II, and III are true.

I, II, and III are false.

I and II are true; III is false.

II and III are true; I is false.

None of the above

Question 4. Question :

(TCO 3) Mallard Auto Parts Inc. has 1,000 fenders for 1953 Studebakers on hand. Mallard purchased the fenders in 1965 for $30 each, and the selling price is $400 each. Only rarely does Mallard sell a Studebaker fender, and it is highly unlikely that more than 100 of the remaining fenders will ever be sold. But Mallard has ample storage space and feels an obligation to Studebaker owners. Therefore, the company will not salvage the fenders and will continue to sell them for $400 each. Scrap value of the fenders is $5 each. Under the lower-of-cost-or-market inventory method, _____.

Mallard can expense the 900 excess fenders

Mallard can expense all 1,000 of the fenders because of the unlikelihood that they will be sold

the fenders should be valued at $7,500 ([100 × $30] + [900 × $5])

the fenders should be valued at $5,000 (1,000 × $5)

None of the above

Question 5. Question :

(TCO 7) Martha participated in a qualified tuition program for the benefit of her son. She invested $5,000 in the fund. 4 years later, her son withdrew $7,500, the entire balance in the program, to pay his college tuition.

Martha must include the $2,500 ($7,500 – $5,000) in her gross income when the funds are used to pay the tuition.

Martha must include the portion of the $2,500 accumulated each year in her gross income (i.e., interest).

Martha’s son must include the $2,500 ($7,500 – $5,000) in his gross income when the funds are used to pay the tuition.

Martha’s son must include the portion of the $2,500 accumulated each year in his gross income (i.e., interest).

None of the above

Question 6. Question :

(TCO 7) Generally, deductions for additions to reserves (e.g., an allowance for estimated warranty costs) are not allowed for income tax purposes because allowing the deduction would _____.

result in a mismatching of revenues and expenses

violate the doctrine of constructive receipt

reduce the costs of companies selling defective products

violate the economic performance requirement

None of the above

Question 7. Question :

(TCO 7) Hal sold land held as an investment with a fair market value of $100,000 for $36,000 cash and a note for $64,000 that was due in 2 years. The note bore interest of 11% when the applicable federal rate was 7%. Hal’s cost of the land was $40,000. Because of the buyer’s good credit record and the high interest rate on the note, Hal thought the fair market value of the note was at least $74,000. Which of the following is true?

Hal can elect to treat the $36,000 as a recovery of capital.

Hal must recognize the $70,000 gain in the year of sale.

Hal must recognize the $60,000 gain in the year of sale.

Unless Hal elects not to use the installment method, Hal must recognize $21,600 gain in the year of sale.

None of the above

Question 8. Question :

(TCO 7) Taylor sold a capital asset on the installment basis and did not charge interest on the deferred payment due in 3 years. Which of the following is true?

Interest will be imputed, thus increasing the capital gain.

Interest will be imputed, thus creating ordinary income.

Interest will not be imputed because the contract is for less than 5 years.

Interest will be imputed, thus reducing the seller’s total income from the transactions.

None of the above

Question 9. Question :

(TCO 7) Joan cancels a note issued by Jan (Joan’s daughter) that arose in connection with the sale of property. At the time of the cancellation, the note had a basis to Joan of $10,000, a face amount of $25,000, and a fair market value of $20,000. Presuming the initial sale by Joan qualified as an installment sale, the cancellation results in Joan recognizing a gain of _____.

$25,000

$15,000

$0

$10,000

None of the above

Question 10. Question :

(TCO 2) Which of the following is an exclusion from wage and salary taxable income?

Working condition and de minimis fringes

Certain tuition deductions

Rental value of parsonages

Health savings account

All of the above

ACCT324 Week 3 Quiz Latest 2017 May

1. Question :

(TCO 2) On September 3, 20X1, Able purchased stock in Red Corporation (the stock is not small business stock) for $6,000. On December 31, 20X1, the stock was worth $8,500. On August 15, 20X2, Able was notified that the stock was worthless. How should Able report this item on his 20X1 and 20X2 tax returns?

20X1: $0; 20X2: $6,000 short-term capital loss

20X1: $0; 20X2: $6,000 long-term capital loss

20X1: $2,500 short-term capital loss; 20X2: $8,500 short-term capital loss

20X1: $2,500 short-term capital gain; 20X2: $3,800 long-term capital loss

None of the above

Question 2. Question :

(TCO 2) Saul is single, is under age 65, and has gross income of $50,000. His bona fide deductible expenses are as follows.

Alimony $12,000

Charitable contributions $2,000

Contribution to a traditional IRA $3,000

Expenses paid on rental property $5,000

Interest and taxes on personal residence $7,000

State income tax $1,200

What is Saul’s AGI?

$19,800

$30,000

$35,000

$38,000

$42,000

Question 3. Question :

(TCO 2) Larry, a calendar-year cash-basis taxpayer, has the following transactions.

Salary from job $60,000

Alimony paid to ex-wife $9,000

Medical expenses $4,500

Based on this information, Larry has a (an) _____.

AGI of $46,500

AGI of $51,000

AGI of $60,000

medical expense deduction of $0

None of the above

Question 4. Question :

(TCO 3) During the current year, Chuck’s home was burglarized. Chuck had the following items stolen.

Securities worth $20,000: Chuck purchased the securities 3 years ago for $8,000.

A painting worth $10,000: Chuck purchased the painting 2 years ago for $12,000.

An antique vase worth $800: Chuck purchased the vase 5 years ago for $500.

Chuck’s homeowner’s insurance policy had a $50,000 deductible clause for thefts. If Chuck’s salary for the year was $40,000, determine the amount of Chuck’s itemized deduction as a result of the theft.

$6,400

$7,200

$13,600

$14,400

None of the above

Question 5. Question :

(TCO 10) Diane purchased a factory building on November 15, 1999, for $5 million. She sold the factory building on February 2, 20X2. Determine the cost recovery deduction for the year of the sale.

$16,025

$19,844

$26,458

$158,750

None of the above

Question 6. Question :

(TCO 10) If a vacation home is determined to be a personal- or rental-use residence, then which of the following statements is false?

All income is included in AGI.

All rental-related expenses are deductible from AGI.

Expenses must be allocated between rental and personal use.

Some expenses are deductible from AGI.

None of the above

Question 7. Question :

(TCO 10) Regarding research and experimental expenditures, which of the following are qualified expenditures?

Costs of inspecting materials for quality control

Costs of a consumer survey on a new product

Costs of testing an existing product

All of the above

None of the above

Question 8. Question :

(TCO 10) Tara purchased a machine for $40,000 to be used in her business. The cost recovery allowed for the 3 years the machine was used are as follows.

Cost Recovery Allowed Cost Recovery Allowable

Year 1 $16,000 $8,000

Year 2 $9,600 $12,800

Year 3 $5,760 $7,680

If Tara sells the machine after 3 years for $15,000, how much gain should she recognize?

$3,480

$6,360

$9,240

$11,480

None of the above

Question 9. Question :

(TCO 10) Alice purchased an office condominium on September 20, 20X2 for $200,000. On October 10, she purchased business assets (7-year property) for $80,000. Alice did not elect to expense any of the assets under § 179, and she did not elect straight-line cost recovery. Determine the cost recovery deduction for the business assets for the current year.

$2,856

$25,999

$32,002

$41,428

None of the above

Question 10. Question :

(TCO 2) Ronnie, who had AGI of $30,000, was involved in a car accident in 20X2. His car, which was used only for personal use and had a fair value of $12,000 and an adjusted basis of $9,000, was completely destroyed. He received $5,000 from his insurance company. Ronnie’s casualty loss deduction is _____.

$900 itemized deduction

$900 for deduction

$12,000 itemized deduction

$9,000 itemized deduction

$4,000 for deduction

ACCT324 Week 5 Quiz Latest 2017 May

Question 1. Question :

(TCO 4) Several years ago, Floyd purchased a structure for $150,000 that was originally placed in service in 1929. In the current year, he incurred qualifying rehabilitation expenditures of $200,000. The amount of the tax credit for rehabilitation expenditures and the amount by which the building’s basis for cost recovery would increase as a result of the rehabilitation expenditures are the following amounts.

‘’

$20,000 credit, $180,000 basis

$20,000 credit, $200,000 basis

$20,000 credit, $350,000 basis

$40,000 credit, $160,000 basis

None of the above

Question 2. Question :

(TCO 4) George and Jill are husband and wife, ages 67 and 65, respectively. During the year, they receive Social Security benefits of $4,000 and have adjusted gross income of $11,000. Assuming they file a joint return, their tax credit for the elderly, before considering any possible limitation due to their tax liability, is _____.

$1,125

$750

$450

$375

None of the above

Question 3. Question :

(TCO 4) Harry and Wilma are married and file a joint income tax return. On their tax return, they report $44,000 of adjusted gross income ($20,000 salary earned by Harry and $24,000 salary earned by Wilma) and claim two exemptions for their dependent children. During the year, they pay the following amounts to care for their 4-year-old son and 6-year-old daughter while they work.

ABC Day Care Center: $3,200

Blue Ridge Housekeeping Services: $2,000

Mrs. Mason (Harry’s mother): $1,000

Harry and Wilma may claim a credit for child and dependent care expenses of _____.

$840

$1,040

$1,200

$1,240

None of the above

Question 4. Question :

(TCO 4) In determining the number of withholding allowances on an employee’s Form W-4, the following is false.

Withholding allowances may be claimed for the taxpayer’s spouse and dependents.

Special withholding allowances may be claimed in certain situations.

An additional allowance is available if the taxpayer expects to claim a credit for child and dependent care expenses.

The number of withholding allowances must agree with the number of personal and dependency exemptions claimed on the taxpayer’s income tax return.

None of the above

Question 5. Question :

(TCO 4) In describing FICA taxes, which (if any) of the following statements is incorrect?

The base amounts for 20X1 probably will increase from the 20X0 amounts.

The base amounts for the Social Security and Medicare portions are the same.

If both spouses work, excess FICA taxes need not result.

Excess FICA taxes can be claimed as an income tax credit.

None of the above

Question 6. Question :

(TCO 5) Prior to the effect of the tax credits, Justin’s regular income tax liability is $200,000, and his tentative AMT is $195,000. Justin has the following credits.

Child tax credit: $800

Adoption credit: $5,000

Calculate Justin’s tax liability after credits.

$189,200

$194,200

$195,000

$200,000

None of the above

Question 7. Question :

(TCO 5) In 20X2, Fred has a $75,000 loss on a passive activity for regular income tax purposes. For AMT purposes, his loss is $65,000. The amount of the AMT adjustment resulting from the passive activity loss is _____.

$0

$10,000 positive adjustment

$65,000

None of the above

Question 8. Question :

(TCO 5) Konrad’s AGI is $190,000. He contributed $101,000 in cash to a public charity. What is Konrad’s charitable contribution deduction for AMT purposes?

$50,500

$57,000

$95,000

$101,000

None of the above

Question 9. Question :

(TCO 4) Nonrefundable tax credits include _____.

credits for the elderly

child tax credits

foreign tax credits

All of the above

None of the above

Question 10. Question :

(TCO 4) What is the rationale for the earned income credit?

It is intended to encourage economically disadvantaged individuals to seek work.

It is to help offset regressive taxes.

It provides tax equity to the poor.

All of the above

None of the above

ACCT324 Week 6 Quiz Latest 2017 May

Question 1. Question :

(TCO 6) Alice owns land with an adjusted basis of $305,000, subject to a mortgage of $175,000. Real estate taxes are $4,500 per calendar year and are payable on December 31. On April 1, 20X2, Alice sells her land subject to the mortgage for $325,000 in cash, a note for $300,000, and property with a fair market value of $60,000. What is the amount realized?

$685,000

$686,110

$860,000

$861,110

None of the above

Question 2. Question :

(TCO 6) Frank’s automobile (adjusted basis of $8,000) was used exclusively for business and was damaged in an accident. The fair market value before the accident was $10,000, and the fair market value after was $500. If the insurance recovery was $9,500, then what was Frank’s adjusted basis in the automobile after the casualty?

$0

$1,500

$8,000

($1,500)

None of the above

Question 3. Question :

(TCO 6) Which of the following is correct?

The gain basis for property received by gift is the lesser of the donor’s basis or the fair market value on the date of the gift.

The loss basis for property received by gift is the same as the donor’s basis.

The gain basis for inherited property is the same as the decedent’s basis.

The loss basis for inherited property is the lesser of the decedent’s basis or the fair market value on the date of the decedent’s death.

None of the above

Question 4. Question :

(TCO 6) Tobin inherited 100 acres of land on the death of his father in 20X2. A federal estate tax return was filed, and the land was valued at $150,000 (its fair market value at the date of the death). The father had originally acquired the land in 1963 for $12,000 and, prior to his death, had made permanent improvements of $3,000. What is Tobin’s basis in the land?

$12,000

$15,000

$150,000

$165,000

None of the above

Question 5. Question :

(TCO 6) The basis of personal-use property converted to business use is _____.

always the lower of its adjusted basis or fair market value on the date of conversion

always its adjusted basis on the date of conversion

always its fair market value on the date of conversion

always the higher of its adjusted basis or fair market value on the date of conversion

None of the above

Question 6. Question :

(TCO 6) In order to qualify for like-kind exchange treatment under § 1031, which of the following requirements must be satisfied?

The form of the transaction is an exchange.

Both the property transferred and the property received are held either for productive use in a trade or business or for investment.

The exchange must be completed by the end of the second tax year following the tax year in which the taxpayer relinquishes his or her like-kind property.

A and B

A, B, and C

Question 7. Question :

(TCO 11) Lynn purchases a house for $52,000. She converts the property to rental property when the fair market value is $115,000. After deducting depreciation (cost recovery) expense of $1,130, she sells the house for $120,000. What is her recognized gain or loss?

$0

$6,130

$37,630

$69,130

None of the above

Question 8. Question :

(TCO 11) If boot is received in a § 1031 like-kind exchange, and gain is recognized, then which formula correctly calculates the basis for the like-kind property received?

Adjusted basis of like-kind property surrendered + gain recognized – fair market value of boot received

Fair market value of like-kind property surrendered + gain recognized – fair market value of boot received

Fair market value of like-kind property received – postponed gain

A and C

None of the above

Question 9. Question :

(TCO 11) During 20X2, Ted and Judy, a married couple, decided to sell their residence, which had a basis of $162,000. They had owned and occupied the residence for 11 years. To make it more attractive to prospective buyers, they had it painted in April at a cost of $5,000 and paid for the work immediately. They sold the house in May for $395,000. Broker’s commissions and other selling expenses amounted to $24,000. They purchased a new residence in June for $350,000. What is the adjusted basis of the new residence?

$0

$141,000

$146,000

$151,000

None of the above

Question 10. Question :

(TCO 11) Tammy, who is single, sells her personal residence (adjusted basis of $130,000) for $290,000. She has owned and lived in the residence for 3 years. Her selling expenses are $18,000. Three weeks prior to the sale, Tammy paid a carpenter and a painter $1,000 to make some repairs and paint the two bathrooms. Her recognized gain is _____.

$142,000

$0

$141,000

$139,000

None of the above

ACCT324 Week 7 Quiz Latest 2017 May

Question 1. Question :

(TCO 6) James is a dealer in securities. He would like to acquire and hold stock as a capital asset, then sell it to get a capital gain or loss. Which of the statements below is correct?

Because he is a dealer, he cannot hold stock as a capital asset.

Because he is a dealer, all the stock he acquires is a capital asset.

Losses are capital losses if, at any time, the stock has been clearly identified by James as held for investment.

If James clearly identifies the stock as held for investment by the close of business on the acquisition date, then gain from the stock’s sale will be capital gain.

C and D

Question 2. Question :

(TCO 6) Which of the statements below concerning sports franchises (e.g., the Detroit Tigers) is correct?

Sports franchises are subject to the franchise rules of § 1253.

Player contracts are usually one of the major assets acquired with a sports franchise.

Player contracts are amortizable over 15 years.

All of the above

None of the above

Question 3. Question :

(TCO 6) On August 10, 20X2, Black Inc. acquired an office building as a result of a like-kind exchange. Black had given up a factory building that it had owned for 18 months as part of the like-kind exchange. Which of the statements below is correct?

The holding period of the office building does not include the holding period of the factory building.

The holding period of the factory building starts on August 11, 20X2.

The holding period of the factory building starts on August 10, 20X2.

The holding period of the office building includes the holding period of the factory building.

None of the above

Question 4. Question :

(TCO 6) A business building owned by an individual is destroyed by fire. The building was depreciated using straight-line depreciation. The building was insured, and the insurance proceeds exceeded the building’s adjusted basis. The building was not replaced. The insurance proceeds did not exceed the original cost of the building. The gain from disposition of the building is initially _____.

casualty gain

casualty loss

Section 1231 gain

Section 1250 gain

None of the above

Question 5. Question :

(TCO 11) Julia purchased vacant land in 20X1 that she subdivided for resale as lots. All 10 of the lots were sold during 20X2. The lots had a tax basis of $3,000 each and sold for $45,000 each. Julia made no substantial improvements to the lots. She acted as her own real estate broker, so there were no sales expenses for selling the lots. Which of the following statements is correct?

Julia must hold the lots for at least 5 years before she is eligible for the special capital gain treatment of 1237.

Some of the gain from the sale of the 10 lots is long-term capital gain.

All of the gain from the sale of the 10 lots is long-term capital gain.

To be eligible for the special capital gain treatment of § 1237, Julia must be a real estate dealer.

None of the above

Question 6. Question :

(TCO 11) Ryan has the following capital gains and losses for 20X2: $3,000 STCL, $3,000 at 28% gain, $2,000 at 25% gain, and $6,000 at 0% / 15% gain. Which of the following is correct?

The net capital gain is composed of $2,000 at 25% gain and $6,000 at 0% / 15% gain.

The net capital gain is composed of $2,000 at 28% gain and $6,000 at 0% / 15% gain.

The net capital gain is composed of $3,000 at 28% gain, $2,000 at 25% gain, and $3,000 of 0% / 15% gain.

The net capital gain is composed of $1,000 at 25% gain and $7,000 at 0% / 15% gain.

None of the above

Question 7. Question :

(TCO 11) For 20X2, Ryan (a single person) has $35,000 net capital gain (all 0% / 15% gain). His taxable income is $185,000. Which of the following is correct?

The net capital gain will be subject to special tax treatment.

Ryan’s taxable income without the net capital gain will be taxed at greater than 25%.

The tax rate on the net capital gain cannot exceed 15%.

All of the above

None of the above

Question 8. Question :

(TCO 11) An individual had the following gains and losses during 20X2 on property held for the long-term holding period: sale of Orange common stock ($3,000 gain), sale of real property used in the taxpayer’s business ($1,800 loss), and destruction of real property used in the taxpayer’s business by fire ($1,000 loss). Which of the following is correct?

The fire loss would reduce the real property sale loss.

The fire loss would reduce the stock sale gain.

The sale of real property loss would be netted against the stock sale gain.

The sale of real property is a § 1231 loss.

None of the above

Question 9. Question :

(TCO 11) An individual has a $10,000 § 1245 gain, a $15,000 § 1231 gain, a $13,000 § 1231 loss, a $4,000 § 1231 look-back loss, and a $15,000 long-term capital gain. The net long-term capital gain is _____.

$30,000

$40,000

$17,000

$15,000

None of the above

Question 10. Question :

(TCO 11) What is the proper series of steps in Section 1231 computation?

§ 1231 netting, casualty netting, and lookback provisions

Casualty netting, § 1231 netting, and lookback provisions

Lookback provisions, § 1231 netting, and casualty netting

§ 1231 netting, lookback provisions, and casualty netting

Casualty netting, lookback provisions, and § 1231 netting

ACCT324 Week 2 You Decide Latest 2017 May
Scenario Summary

A new client enters your office and places a box of receipts and bank statements on your desk, saying that she would like to have a set of financials prepared and tax returns completed for the current tax year. She also states that the financials and the return will be given to her bank as part of the documentation needed to acquire a $300,000 bank loan for home improvement. She would like you to complete the work within a week. As you review the documentation, you note that some of the expenses and receipts for income are not documented. Specifically, she writes expenses to deduct on a piece of paper and provides no supporting documentation. When you request the clarification and additional information from the client, she tells you that she has no more documentation and that is all she can give you.

Listen

Your Role and Assignment

You role in this scenario is to decide what you will do, what you can do, and how to proceed. You are aware that the bank will rely on the financial statements and income tax return that you prepare in making its decision on whether to grant the loan to your client. Do you complete the financials and prepare the tax return? What obligation do you have to communicate to the client as to the type of supporting documentation needed for the filing of a complete tax return? Are there any risks that taxpayers may face as a result of having poor documentation? What are those risks? Would you communicate those risks to the client? What obligation do you have to help her with respect to the preparation of the income tax return?

Listen

Key Players

You Decide

ScenarioYour RoleKey PlayersAssignment

Scenario

You have a small tax accounting preparation and bookkeeping practice. A new client enters your office and places a box of receipts and bank statements on your desk, saying that she would like to have a set of financials prepared and tax returns completed. She also states that the financials and the return will be given to her bank as part of the documentation needed to acquire a $300,000 bank loan. She would like you to complete the work within a week. As you review the documentation, you note that some of the expenses and receipts for income are questionable and you would need more information in order to completely and accurately complete the forms she has requested. When you request the additional information from the client, she tells you that she has no more documentation and that is all you can be given.

Your Role

You role in this scenario is to decide on what you will do, what you can do, and how to proceed. Do you complete the financials, and are you able to prepare the tax returns? What information do you give to the client so that she can present it to the bank in hopes of getting her $300,000 loan? You know that if she does not get the loan, then her business will not be able to continue and she will have to lay off her five employees and close her doors. What obligation do you have to help her and how can you help her?

Key Players

JohnOwnerSueClient

Assignment

It is time for you to make a decision based on the scenario, your role, and the information provided by the key players involved.

If you are finished reviewing this scenario, close this window and return to this Week’s You Decide section to complete the activity for this scenario.

You can return and review this scenario again at any time.Listen

Assignment

Assignment

Prepare a 2 to 3-page paper in APA format citing applicable IRS codes and accounting rules for your decision. The essay should be at least 500 words in length.

ACCT324 Week 3 Course Project Latest 2017 May
Part I
For Part I (due in Week 3), you are asked to use the introductory sentence about the taxpayer and complete paragraph items 12, 13, 14, 16, and 17. You will also need to read the requirements and note that the taxpayer is not making a contribution to the Presidential Campaign Fund.

Determine the forms to be completed. The forms are also located in Appendix B of the eBook. Once completed, save your form(s) with the format Your Last Name-formname.pdf (e.g., Smith-f2106.pdf). Submit your assignment to the Week 3 Course Project Dropbox.

Note: Optional tax software: Please note that DeVry does not provide tax software to complete the project. Using software to complete the project is optional but not required. The forms are provided in Course Resources for your use. The forms are also located in Appendix B of the eBook. Again, please look at Back Matters in the textbook, and you will see Appendix B Tax Forms that contains the forms that you will need for this project. Students who desire to use the software to complete the project have the following options.

H&R Block At Home: The software is included with the purchase of the hard copy of the textbook. You may use the software disk provided and follow the installation instructions. You may review the student companion website or contact the publisher’s customer service to obtain information regarding the purchase of the H&R Block At Home software online. If purchased and used to complete your project assignment, you will need to submit the file created by the software.

· Save your work as an H&R Block At Home file.
· Save the problem as a PDF file.
Turbo Tax: If you purchased Turbo Tax and completed your assignment as a Turbo Tax file, you will need to submit your assignment as a PDF file before submitting it to your professor.

ACCT324 Week 5 Course Project Latest 2017 May

Part II
For Part II (due in Week 5), you are asked to do the following.

Use Part I, which you completed previously.
Correct your Part I assignment mistakes, if any, based on the solution you were provided by your professor at the end of Week 4.
Complete the following additional paragraph items: 1, 2, 3, 4, and 15.
Determine the forms to be completed. You will be including additional forms from Part I and changing forms you have already submitted. The forms are also located in Appendix B of the eBook. Save your file with the format Your Last Name-formname.pdf (e.g., Smith-f2106.pdf), and submit it to your professor via the Week 5 Course Project Dropbox.

ACCT324 Week 6 Course Project Latest 2017 May

Part III
For Part III (Week 6), you are asked to do the following.

· Use Parts I and II, which you completed previously.
· Correct your Part II assignment mistakes, if any, based on the solution you were provided by your professor at the end of Week 5.
· Complete the following additional paragraph items: 5, 6, 7, and 8.
Determine the forms to be completed. You will be including additional forms from the Part II submission and changing forms you have already submitted. The forms are also located in Appendix B of the eBook. Save your file with the format Your Last Name-formname.pdf (e.g., Smith-f2106.pdf), and submit it to your professor via the Week 6 Course Project Dropbox.

ACCT324 Week 7 Course Project Latest 2017 May

Part IV
For Part IV (Week 7), you are asked to do the following.

· Use Parts I, II, and III, which you completed previously.
· Correct your Part III assignment mistakes, if any, based on the solution you were provided by your professor at the end of Week 6.
· Complete the following additional paragraph items: 9, 10, and 11.
Determine the forms to be completed. You will be including additional forms from the Part III submission and changing forms you have already submitted. The forms are also located in Appendix B of the eBook. Save your file with the format Your Last Name-formname.pdf (e.g., Smith-f2106.pdf), and submit it to your professor via the Week 7 Course Project Dropbox.

ACCT324 Week 4 Mid Term Latest 2017 May

1. Question :

(TCO 9) Which of the following is not a characteristic of the audit process?

The IRS can reward informants when the information provided leads to the collection of additional taxes.

Most taxpayer audits do not involve special agents.

Self-employed taxpayers are more likely to be selected for audit than employed taxpayers.

Less important issues are handled by means of a correspondence audit.

If a taxpayer disagrees with the IRS auditor’s finding, the only resort is to use the courts.

Question 2. Question :

(TCO 9) A characteristic of fraud penalties is that _____.

civil fraud can result in a fine and a prison sentence

when negligence and civil fraud apply to a deficiency, both penalties are imposed

the criminal fraud penalty is 75% of the deficiency attributable to the fraud

the IRS has a greater burden of proof in the case of criminal fraud than with civil fraud

None of the above

Question 3. Question :

(TCO 1) Federal tax legislation generally originates in what body?

Internal Revenue Service

Senate Finance Committee

House Ways and Means Committee

Senate floor

None of the above

Question 4. Question :

(TCO 1) In § 212(1), the number (1) stands for the _____.

section number

subsection number

paragraph designation

subparagraph designation

None of the above

Question 5. Question :

(TCO 11) Which of the following taxpayers may file as a head of household in 20X2?

Ron provides all of the support for his mother, Betty, who lives by herself in an apartment in Fort Lauderdale. Ron pays the rent and other expenses for the apartment and properly claims his mother as a dependent.

Tammy provides over one half of the support for her 18-year-old brother, Dan. Dan earned $4,200 in 20X2 working at a fast-food restaurant and is saving his money to attend college in 20X3. Dan lives in Tammy’s home.

Joe’s wife left him late in December of 20X1. No legal action was taken, and Joe has not heard from her in 20X2. Joe supported his 6-year-old son, who lived with him throughout 20X2.

Ron only

Tammy only

Joe only

Ron and Joe only

Ron, Tammy, and Joe

Question 6. Question :

(TCO 11) During the year, Kim sold the following assets: business auto for a $1,000 loss, stock investment for a $1,000 loss, and pleasure yacht for a $1,000 loss. Presuming adequate income, how much of these losses may Kim claim?

$0

$1,000

$2,000

$3,000

Question 7. Question :

(TCO 7) Kathy operates a gym. She sells memberships that entitle the member to use the facilities at any time. A 1-year membership costs $360 ($360 / 12 = $30 per month); a 2-year membership costs $600 ($600 / 24 = $25 per month). Cash payment is required at the beginning of the membership period. On July 1, 20X2, Kathy sold a 1-year membership and a 2-year membership. Which of the following is (are) true?

I. If Kathy is a cash-basis taxpayer, her 20X2 gross income from the contracts is $960 ($360 + $600).

II. If Kathy is an accrual-basis taxpayer, her 20X2 gross income from the contracts is $330 ([6 / 12 × $360] + [6 / 24 × $600]).

III. If Kathy is an accrual-basis taxpayer, her 20X3 gross income from the contracts is $630 ([6 / 12] [$360] + $450).

Only I is true.

I and II are true.

II and III are true.

I, II, and III are true.

None of the above

Question 8. Question :

(TCO 7) With respect to income from services, which of the following is true?

The income is always amortized over the period the services will be rendered by an accrual-basis taxpayer.

A cash-basis taxpayer can spread the income from a 12-month service contract over the contract period.

If an accrual-basis taxpayer sells a 24-month service contract on July 1, 20X2 for $2,400, the taxpayer’s 2013 gross income from the contract is $1,800.

If the accrual-basis taxpayer sells a 12-month service contract on July 1, 20X2, all of the income is recognized in 20X2.

None of the above

Question 9. Question :

(TCO 3) Section 119 excludes the value of meals from the employees’ gross income _____.

whenever the employer pays for the meals

when the employer pays for the meals if the employee makes an accounting to the employer

when the meals are provided for the employee on the employer’s business premises as a convenience to the employee

when the meals are provided for the employee on the employer’s business premises as a convenience to the employer

None of the above

Question 10. Question :

(TCO 3) Under the Swan Company’s cafeteria plan, all full-time employees are allowed to select any combination of the benefits below, but the total received by the employee cannot exceed $8,000 a year.

I. Group medical and hospitalization insurance for the employee: $3,600 a year

II. Group medical and hospitalization insurance for the employee’s spouse and children: $1,200 a year

III. Childcare payments: actual cost, but not more than $4,800 a year

IV. Cash required to bring the total of benefits and cash to $8,000

Which of the following statements is true?

Sam, a full-time employee, selects choices II and III and $2,000 cash. His gross income must include the $2,000.

Paul, a full-time employee, elects to receive $8,000 cash because his wife’s employer provided these same insurance benefits for him. Paul is required to include the $8,000 in gross income.

Sue, a full-time employee, elects to receive choices I, II, and $3,200 for III. Sue is not required to include any of the above in gross income.

All of the above

None of the above

Question 11. Question :

(TCO 10) On June 1, 20X1, Irene places in service a new automobile that cost $21,000. The car is used 70% for business and 30% for personal use (assume that this percentage is maintained for the life of the car). She does not elect to take additional first-year depreciation. Determine the cost recovery deduction for 20X2.

$3,060

$3,290

$3,360

$6,720

None of the above

Question 12. Question :

(TCO 10) Cory incurred and paid the following expenses.

Tax return preparation fee $600

Moving expenses $2,000

Investment expenses $500

Expenses associated with rental property $1,500

Interest expense associated with loan to finance tax-exempt bonds $400

Calculate the amount that Cory can deduct (before any percentage limitations).

$5,000

$4,600

$3,000

$1,500

None of the above

Question 13. Question :

(TCO 10) Sarah incurred the following expenses for her dependent son during the current year.

Payment of principal on son’s automobile loan $5,000

Interest on above loan $2,000

Payment of son’s property taxes $1,200

Payment of principal on son’s personal residence loan $1,500

Payment of interest on son’s personal residence loan $8,000

How much may Sarah deduct in computing her itemized deductions?

$0

$9,200

$11,200

$17,700

None of the above

Question 14. Question :

(TCO 10) Danielle owns a vacation cottage. During the current year, she rented it for $1,500 for 48 days and lived in it for 12 days. How would any expenses be accounted for?

The expenses would not be deductible.

The expenses must be allocated between personal and rental days.

The expenses must be allocated to rental days only.

The expenses must be allocated to personal days only.

None of the above

Question 15. Question :

(TCO 3) During the year, Rick had the following insured personal casualty losses (arising from one casualty). Rick also had $18,000 AGI for the year.

Asset

Adjusted Basis

Fair Market Value (Before)

Fair Market Value (After)

Insurance Recovery

A

$500

$700

$300

$150

B

$3,000

$2,000

-0-

$500

C

$700

$900

-0-

$200

Rick’s casualty loss deduction is _____.

$400

$600

$1,000

$1,400

None of the above

Question 16. Question :

(TCO 3) Which of the following is not deductible?

Moving expenses

Tax return preparation fees

Expenses incurred for the production of income

Hobby expenses in excess of hobby income

None of the above

Question 17. Question :

(TCO 3) Jennifer donates $1,000 to the university’s athletic department. The donation guarantees that she will have preferred seating at basketball games. Subsequently, Jennifer purchases four $50 tickets. Jennifer is allowed a charitable deduction of how much?

$1,000

$200

$0

$800

Question 18. Question :

(TCO 3) Byron owned stock in Blossom Corporation that he donated to a museum (a qualified charitable organization) on June 8 this year. What is the amount of Byron’s deduction, assuming that he had purchased the stock for $10,500 last year on August 7 and the stock had a fair-market value of $13,800 when he made the donation?

$3,300

$10,500

$12,150

$13,800

None of the above

Question 19. Question :

(TCO 3) Pat died this year. Before she died, Pat gave 5,000 shares of stock in Coyote Corporation (a publicly traded corporation) to her church (a qualified charitable organization). The stock was worth $180,000, and she had acquired it as an investment 4 years ago at a cost of $150,000. In the year of her death, Pat had AGI of $300,000. In completing her final income tax return, how much of the charitable contribution should Pat’s executor deduct?

$90,000

$150,000

$180,000

$210,000

None of the above

Question 20. Question :

(TCO 3) Sandra acquired a passive activity 3 years ago. Until last year, the activity was profitable and her at-risk amount was $300,000. Last year, the activity produced a loss of $100,000, and in the current year, the loss is $50,000. Assuming Sandra has received no passive income in the current or prior years, her suspended passive loss from the activity is _____.

$90,000 from last year and $50,000 from the current year

$100,000 from last year and $50,000 from the current year

$0 from last year and $0 from the current year

$50,000 from the current year

None of the above

Question 21. Question :

(TCO 3) Jon owns both a computer consulting business and an apartment building in which he is a material participant. Of the 2,000 hours he spends on these activities during the year, 55% of the time is spent operating the apartment building and 45% of the time is spent in the computer consulting business. Which of the following statements is correct?

The computer consulting business is a passive activity, but the apartment building is not.

The apartment building is a passive activity, but the computer consulting business is not.

Both the apartment building and the computer consulting business are passive activities.

Neither the apartment building nor the computer consulting business are passive activities.

None of the above

Question 22. Question :

(TCO 2) The installment method applies when a payment will be received after the tax year of the sale _____.

by an investor who sold real estate at a gain

by an investor who sold real estate at a loss

by an appliance dealer who sold inventory

by an investor who sold IBM Corporation common stock

None of the above

Question 23. Question :

(TCO 2) In 20X1, Helen sold property and reported her gain by the installment method. Her basis in the property was $150,000 ($250,000 cost less $100,000 of depreciation). Helen sold the property for $375,000, with $75,000 due on the date of the sale and $300,000 (plus interest at the federal rate) due in 20X2. Helen’s recognized installment sale gain in 20X2 is _____.

$0

$45,000

$75,000

$100,000

None of the above

Question 24. Question :

(TCO 2) Pedro, not a dealer, sold real property that he owned with an adjusted basis of $60,000 and encumbered by a mortgage for $28,000 to Pat in 20X0. The terms of the sale required Pat to pay $14,000 cash, assume the $28,000 mortgage, and give Pedro eleven notes for $6,000 each (plus interest at the federal rate). The first note was payable two years from the date of sale, and each succeeding note became due at 2-year intervals. Pedro did not elect out of the installment method for reporting the transaction. If Pat pays the 20X3 note as promised, what is the recognized gain to Pedro in 20X2 (exclusive of interest)?

$6,000

$3,600

$2,400

$0

None of the above

Question 25. Question :

(TCO 2) Social considerations can be used to justify _____.

allowing a federal income tax deduction for state and local sales taxes

allowing excess capital losses to be carried over to other years

allowing accelerated amortization for the cost of installing pollution control facilities

allowing a credit for childcare expenses

None of the above

1. Question :

(TCO 3) Joe’s automobile, which was used only for business purposes, was damaged in an accident. At the date of the accident, the fair-market value of the automobile was $13,000 and its adjusted basis was $7,000. After the accident, the automobile was appraised at $4,000. Calculate Joe’s loss. Is it a deduction from or for AGI?

Question 2. Question :

(TCO 1) Elaine provides more than half of the support for her son James, who does not live with her. James is 26 and is a full-time law student. He earns $2,000 from a part-time job. He has an $11,000 scholarship covering his tuition. May Elaine claim James as a dependent? Fully explain you answer.