1. (TCO E) For federal tax purposes, income attributable to the direct efforts of the tax payer, suchas salary, is classified as: (Points : 5) portfolio income. active income. passive income. None of the above 2. (TCO D) Which of the following is an example of a nontaxable like-kind exchange? (Points : 5) 3. (TCO H) Alex and Amy file a joint return for the 2012 tax year. Their adjusted gross income is$90,000. They had net investment income of $8,000. In 2012, they had the following interestexpenses: • Personal credit card interest: $5,000 • Home mortgage interest: $10,000 • Interest paid on qualified education loans: $2,000 • Investment interest (on loans used to buy stocks): $10,000 What is the interest deduction for Alex and Amy for the 2012 tax year? (Points : 5)
4. (TCO B) Unreimbursed expenses of employees are considered to be deductions: (Points : 5) 5. (TCO A) Which of the following expenditures is always an itemized deduction for individualtaxpayers? (Points : 5) Charitable contributions State and local income taxes Moving expenses All of the above 6. (TCO E) Adam sold a piece of business equipment that had an adjusted basis to him of $50,000.In return for the equipment, Adam received $80,000 cash and a painting with a fair market value of$20,000 from the buyer. The buyer also assumed Adam’s $25,000 loan on the equipment. Adampaid $5,000 in selling expenses. What is the amount of Adam’s gain on the sale? (Points : 5) 7. (TCO I) Gary and Gerdy Gray purchased a home for $125,000 on September 15, 2010. OnOctober 7, 2011 they were divorced, and as part of the divorce agreement, the home wastransferred to Gerda, who sold the home on October 18, 2012 for $350,000. How much can Gerdaexclude? (Points : 5)
8. (TCO I) Under the accrual method of accounting, expenses are generally accrued when: (Points :5) 9. (TCO D) Sean, a calendar year taxpayer, purchased stock on June 18, 2011 for $8,000. The stockbecame worthless on June 4, 2012. What is Sean’s loss in 2012? (Points : 5) $8,000 short-term capital loss No loss $8,000 long-term capital loss $8,000 itemized deduction for investments
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- Winter '15
- Taxation in the United States