Exam (elaborations)
TAX 4001 Final, Tax accounting test 3, accct, Federal Taxation Exam #2
- Module
- REE 3433 Chapter 3 Q
- Institution
- REE 3433 Chapter 3 Q
TAX 4001 Final, Tax accounting test 3, accct, Federal Taxation Exam #2
[Show more]
Content preview
TAX 4001 Final, Tax accounting test 3,accct, Federal Taxation Exam #2
"Little Magician" is the name of a painting created by artist Lion-o Messy. The owner
recently recognized a $43,500 gain on sale of the figurine. Which of the following
statements is false? - ANS-If a commercial art gallery that had held Little Magician in its
inventory was the seller, the gain is ordinary.
If a private collector who purchased Little Magician from an art gallery was the seller,
the gain is capital gain.
None of these choices are false.
If Lion-o was the seller, the gain is ordinary.
Answer: none of these choices are false
"Tiny Dancer" is the name of a bronze figurine created by artist Diego Ossa. The owner
recently recognized a $43,500 gain on sale of the figurine. Which of the following
statements is false? - ANS-none of the above is false
A business generates profit of $100,000. The owner has a 37% marginal tax rate. What
amount of corporate and individual income tax will be paid on this profit if the business
is a regular corporation and no income is distributed?
CH. 12 - ANS-Corporate tax, $21,000; individual tax, $0
A business generates profit of $100,000. The owner has a 37% marginal tax rate. What
amount of corporate and individual income tax will be paid on this profit if the business
is a regular corporation and no income is distributed? - ANS-Corporate tax, $21,000;
individual tax, $0
A business generates profit of $100,000. The owner has a 37% marginal tax rate. What
amount of corporate and individual income tax will be paid on this profit if the business
is an S corporation and no income is distributed?
CH. 12 - ANS-Corporate tax, $0; individual tax, $37,000
A business generates profit of $100,000. The owner has a 37% marginal tax rate. What
amount of corporate and individual income tax will be paid on this profit if the business
,is an S corporation and no income is distributed? - ANS-Corporate tax $0 and individual
tax $37,000
A business generates profits of $150,000. The owner currently has a 32% marginal tax
rate. What is the total amount of taxes paid if the business is a regular corporation and
$20,000 in dividends is distributed to its sole individual shareholder? - ANS-Corporate
tax, $31,500; individual tax, $3,000
Corporate tax= 150,000 x 21%= 31,500
Individual= 20,000 x 15%= 3,000
A corporation that incurs $33,500 organization costs must capitalize the costs and
amortize them over 180 months - ANS-False
A fire completely destroyed a warehouse owned by Della Company and used for nine
years in its shipping business. Della's adjusted basis in the warehouse was $748,200,
and its replacement value was $1 million. Unfortunately, the warehouse was uninsured.
As a result of the destruction, Della
recognizes - ANS-$748,200 ordinary loss
A fire completely destroyed a warehouse owned by Della Company and used for nine
years in its shipping business. Della's adjusted basis in the warehouse was $748,200,
and its replacement value was $1 million. Unfortunately, the warehouse was uninsured.
As a result of the destruction, Della recognizes: - ANS-$748,200 ORDINARY loss
A fire destroyed furniture and fixtures used in Jock's business. Jock's adjusted basis in
the furniture and fixtures was $81,300. Jock received a $100,000 reimbursement from
his insurance company and immediately spent $93,000 to purchase new furniture and
fixtures. How much gain or loss must Jock recognize on this involuntary conversion? -
ANS-$7,000
A firm can use LIFO for computing cost of goods sold for tax purposes only if it uses
LIFO for
financial reporting purposes. - ANS-True
A firm must capitalize start-up expenditures of a new business in excess of $5,000 but
may deduct expansion costs of an existing business - ANS-True
A firm's choice of taxable year is usually dictated by the annual operating cycle of the
firm's
,business - ANS-True
A guaranteed payment may be designed to compensate a partner for personal services
rendered to the partnership.
T/F
CH. 10 - ANS-True
A nonprofit corporation may incur a federal income tax if it has unrelated business
income.
T/F
CH. 11 - ANS-True
A partnership deducts guaranteed payments paid to its partners in computing ordinary
income, and partners report guaranteed payments received as ordinary income.
T/F
CH. 10 - ANS-True
A taxpayer that operates more than one business may use a different method of
accounting
for each business. - ANS-True
A taxpayer who pays boot in a nontaxable exchange includes the value of the boot in
the basis of the qualifying property received.
T/F
CH. 9 - ANS-True
A taxpayer who pays boot in a nontaxable exchange includes the value of the boot in
the basis of the qualifying property received. - ANS-True
A taxpayer who realizes a loss on the exchange of like-kind property can elect to
recognize the loss. - ANS-False
, A taxpayer who receives boot in a nontaxable exchange must recognize gain equal to
the lesser of the FMV of the boot or the gain realized.
T/F
CH. 9 - ANS-True
A taxpayer who receives boot in a nontaxable exchange must recognize gain equal to
the lesser of the FMV of the boot or the gain realized. - ANS-True
A taxpayer who receives or pays boot in a nontaxable exchange must recognize gain to
the extent of the FMV of the boot.
T/F
CH. 9 - ANS-False
Payment of boot does not trigger gain recognition.
A tornado demolished several delivery vans owned for three years by Wadham
Company. Wadham's adjusted basis in the vans was $28,400, and Wadham paid
$90,000 to purchase new vans. Wadham received a $25,000 settlement from its
casualty insurance company. Consequently, Wadham recognizes: - ANS-none of these
choices are correct
Aaron James has a qualifying home office. The office is 500 square feet and the entire
house is 2,500 square feet. Use the following information to determine his allowable
home office deduction:
Net income from self-employment before home office deduction$ 150,000Expenses
from home (100%)Home mortgage interest12,000Property taxes4,000Homeowner's
insurance2,500Utilities2,200Depreciation on office portion of home1,100 -
ANS-Allowable home deduction= $5,240
Aaron, Incorporated is a nonprofit corporation that collects and distributes food for
needy families. Aaron, Incorporated also operates a small grocery store for profit. Which
of the following statements is true?
CH. 11 - ANS-Only the income from the grocery store is taxable.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller topgradesdr. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for £6.37. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
80461 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy revision notes and other study material for 14 years now