Practice Questions Solution Exam 1

Practice Questions Solution Exam 1 - Practice Questions...

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Practice Questions Exam 1 Solutions 1. A 2. $100,000 in Year 1 and the remaining $1,740,000 would be recognized in Year 2. 3. if Home Cable were a cash-basis taxpayer, all $1,840,000 of the income would be taxable in Year 1, when received. 4. D (after tax return for the $1.70 is $1.02) The after tax-return for the other options are: a) . 84, b) .60, c) .90. 5. $50,000 (amount in excess of proceeds treated as taxable interest) 6. a) $150 = (1000 * .15 + 5,000 * .0). b) $1,030 = (1000 * .28 + 5,000 * .15) 7. Gross Income = 100,000 – (10,000 + 12,000 +4,000 + 5,000) = 69,000. Taxable Income = 69,000 – 5,700 – 3,650 = 59,650. 8. Year 1: Jack $2,000 REALIZED loss, $0 recognized because of related party rules. Year 3: Zeta REALIZES $3,000 gain, RECOGNIZES $1,000 gain because can offset gain with Jack’s disallowed loss. No effect on Zeta in Year 1 (its basis in asset is $24,000) and no effect on Jack in Year 3. 9.
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This note was uploaded on 12/07/2010 for the course ACG 3361, 4401 taught by Professor Goldwater,canada,judd,byrd,theniel during the Spring '10 term at University of Central Florida.

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