AC553 Quiz 1 - AC553 Quiz 1 1. A business bad debt is...

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AC553 Quiz 1 1. A business bad debt is deductible for tax purposes as a(n): Your Answer: Short-term capital loss Long-term capital loss Ordinary business deduction CORREC T None of the above 2. Which of the following items is not subject to federal income tax? Your Answer: Interest on U.S. Treasury bonds. Gambling winnings. Interest on loans made in the ordinary course of business. Life insurance proceeds. CORREC T 3. Sam owes Bob $8,000. Bob cancels (forgives) the debt. The cancellation is not a gift and Sam is neither insolvent nor bankrupt. Which of the following statements is correct concerning the impact of this transaction? Your Answer: Both Bob and Sam recognize $8,000 of taxable income. Bob recognizes $8,000 of taxable income. Sam recognizes $8,000 of taxable income. CORREC T Neither Bob nor Sam has any taxable income from this transaction.
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4. Jane purchased an annuity contract that pays her $800 per month. The annuity cost her $50,000 and it has an expected return of $100,000. How much of each monthly annuity payment is includible in Jane's gross income? Your Answer:
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This note was uploaded on 11/19/2010 for the course ACCOUNTING AC553 taught by Professor Davey during the Spring '10 term at DeVry Irvine.

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AC553 Quiz 1 - AC553 Quiz 1 1. A business bad debt is...

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