FINAL-SPRING-2007 - Spring 2007 Final Econ 138B Student: _...

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Spring 2007 Final Econ 138B Student: ___________________________________________________________________________ 1. The tax law is not neutral if a taxpayer receives 80% ownership in a corporation in exchange for A. machinery. B. cash. C. a patent purchased 5 years ago. D. personal services. 2. On January 21, 2005, Ron purchased 100 shares of Bad Company common stock for $54,500. Ron sold all of the Bad Company stock on May 18, 2006 for $24,250. On June 30, 2006, Ron repurchased 100 shares of Bad Company stock for $5,000. The new shares are sold on July 31, 2007 for $15,500. How much gain/loss does Andy recognize in 2006 with respect to the Bad Company stock? A. $ 9,750 loss B. $ 11,250 loss C. $ 10,500 gain D. $ 30,250 loss E. No gain or loss 3. Randolph Scott operates as a sole proprietorship. This year his net profit was $10,570. For tax purposes this amount should be reported on A. a Form 4797, Sales of Business Property. B. Schedule C, Statement of Profit or Loss From Business. C. the first page of Form 1040 as other income. D. a separate tax return prepared for the business operations. E. Schedule E, Statement of Rent and Royalty Income. 4. Sue's net or "take-home" pay was $23,205. Her only payroll deductions were for payroll taxes. Federal income tax withholdings totaled $4,500. What was the amount of her gross wages for the year? A. $ 25,736 B. $ 30,000 C. $ 29,536
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A. A partnership is a distinct legal entity that may enter into valid contracts. B. Partnerships are unincorporated entities. C. Only individuals may be partners in a partnership. D. Partnerships are sometimes referred to as "passthrough entities" since they are reporting entities that do not pay taxes. 6. Mutt and Jeff are partners and share profits and losses equally. Partnership operations for the current tax year were: Mutt's tax basis in his partnership interest on January 1, 2006, was $12,000. What is his basis on January 1, 2007? A. $ 25,000 B. $ 37,000 C. $ 13,000 D. $ 27,000 7. Alex is a partner in a calendar year partnership. His Schedule K-1 showed the following: Ordinary Profit: $41,000 Short-term Capital Loss: $1,500 He has a $7,000 loss carryforward from the partnership last year. What is his tax basis in his partnership interest, after all adjustments, on December 31? A. $ 41,000 B. $ 32,500 C. $ 39,500 D. $ 34,000 8. Which of the following statements is correct in regard to S corporations? A. The number of shareholders an S corporation may have is limited to 50. B. Any individual, estate, corporation, or trust may be an S corporation shareholder. C. The S corporation may have only one class of stock. D. Ordinary income of the S corporation is subject to self-employment taxes.
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This note was uploaded on 04/14/2008 for the course ECON 138A taught by Professor Schneider during the Spring '08 term at UCSB.

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FINAL-SPRING-2007 - Spring 2007 Final Econ 138B Student: _...

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