Take Home Study Exam for Final with solutions

Take Home Study Exam for Final with solutions - FEDERAL...

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FEDERAL INCOME TAXATION ACCT4331 Take Home Study Exam for Final Spring 2008 Name:________________________________ Signature:______________________________ Instructions : This exam is optional and designed to prepare you for the Final. It must be done individually . Clearly mark your answers on BOTH the scantron AND on your test, and do so with a #2 pencil. SHOW ALL WORK to receive credit. Guesses on problems that show no work will be given a zero. All answers must reflect current tax law which we have been referring to this semester. Extra paper can be used and attached if you need any. This exam, and extra sheets you used AND your scantron must be turned in by noon on Friday, May 8 th (late assignments will NOT be accepted for ANY reason – but you can turn them in at MH390A at any time before the deadline). There are 25 MC questions each with a value of 4%, for a total of 100%. Signing this page indicates that you did not cheat in any way including discussing this exam with anyone else in class AT ANY TIME. This take home exam will also be used to calculate your curve on the Final. The formula that will be used to calculate the curve portion of your Final is: (100% - your grade on the Final)*25%*(your grade on the Take Home Exam) Good luck!
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1) G had income and expenses as follows for the current taxable year: Total income $32,400 Exclusions (municipal bond interest) 2,000 Deductions for A.G.I. 1,200 Total itemized deductions 9,920 Standard deduction 5,450 Exemption deductions 7,000 What are G’s adjusted gross income and her taxable income, respectively? a. $29,200; $12,280 b. $31,200; $14,680 c. $29,200; $17,050 d. $28,000; $12,680 a. Adjusted gross income is gross income ($32,400 - $2,000 = $30,400) less any deductions for adjusted gross income ($1,200), or $29,200. Taxable income is the adjusted gross income minus the larger of the standard deduction ($5,450) or the itemized deductions ($9,920) and minus the personal and dependency 2) J and Z, husband and wife, created a trust for J’s aging mother, Betty. This year the trust received dividend income of $15,000 and distributed $10,000 to Betty. The taxable income of the trust and Betty is? a. Trust $15,000, Betty $10,000 b. Trust $0, Betty $15,000 c. Trust $5,000, Betty $10,000 d. Trust $15,000, Betty $0 e. None of the above. c. A trust is treated as a separate taxable entity. It is taxed on the taxable income it received but is entitled to a deduction to the extent it distributes it. The trust received $15,000 of taxable dividend income and distributed $10,000 so the trust reports $5,000 ($15,000 - $10,000) of taxable income while Betty reports $10,000 taxable income. Note that all of the taxable income is taxed.
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