ACCT 553 Final Exam
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Question
1. (TCO E) Interest, dividends, and annuities income are classified as _____. (Points : 5)
active income
passive income
portfolio income
None of the above
2. (TCO D) Tom Tanner traded in a printing press with an adjusted basis of $20,000 for a smaller press valued at
$12,000. In addition to the smaller press, Tom received $3,000 in cash and was relieved of the existing liability of
$5,000 on the old press. What is Tom's recognized gain? (Points : 5)
$0
$3,000
$4,800
$5,000
3. (TCO H) Bob and Susan file a joint return for the 2010 tax year. Their adjusted gross income is $80,000. They had
a net investment income of $9,000. In 2010, they had the following interest expenses.
Personal credit card interest: $5,000
Home mortgage interest: $10,000
Investment interest (on loans used to buy stocks): $10,000
What is the interest deduction for Bob and Susan for the 2010 tax year? (Points : 5)
$19,000
$8,000
$16,000
$25,000
4. (TCO B) Bob and Cindy Smith paid the following medical expenses during the year (all in excess of
reimbursement).
Hospital and doctor bills: $800
Medicine and drugs: $700
Hospitalization insurance premiums: $6,000
Medicine and drugs (for dependent mother, age 71): $1,000
Assuming that the Smiths' adjusted gross income was $60,000, how much of a medical expense deduction may Bob
and Cindy claim on their joint return? (Points : 5)
$8,170
$4,000
$4,330
$8,500
5. (TCO A) ***** *****, a cash-basis, calendar-year taxpayer, paid the following during the year.
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Social security tax (withheld from wages): $4,500
Real estate taxes: $3,200
State
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ncometax: $3,400
Special assessment for installation of sidewalks: $1,140
Penalty on tax underpayment: $300
Flat fee for automobile registration: $90
What itemized deduction may John claim for taxes on his return? (Points : 5)
$7,700
$8,000
$11,190
$6,600
6. (TCO E) Bob sold a piece of business equipment that had an adjusted basis to him of $50,000. In return for the
equipment, Josh received $80,000 cash and a painting with a fair market value of $20,000 from the buyer. The buyer
also assumed Josh's $25,000 loan on the equipment. Josh paid $5,000 in selling expenses. What is the amount of
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- Spring '10
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