Taxation Exam 1

Taxation Exam 1 - 1. Hank bought a small ranch for $300,000...

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1. Hank bought a small ranch for $300,000 in 2004. In 2009, uranium is discovered on neighboring property. The county assessor re-valued Hank’s property at $550,000. Hank does not recognize any income due to the a. All-inclusive Income Concept b. Capital Recovery Concept c. Realization Concept d. Claim of Right Doctrine e. Ability-to-Pay Concept 2. After buying a new sofa at the furniture store. Delores finds a $100 bill in the parking lot near her car. What are the tax effects of this find? I. Delores must recognize $100 of income for this tax year. II. The all-inclusive-income concept applies in this situation. III. She will not recognize the $100 because the IRS will never know about the wind fall. IV.She will not recognize the $100 because there is not a specific tax law provision requiring it. a. Only statement I is correct b. Only statement II is correct c. Only statement IV is correct d. Statements I and II are correct e. Statements II and III are correct 3. Francene “hires” her four-year-old son to be the office manager of her real estate title firm, “Dirty Deeds Done Dirt Cheap.” She deducts his $20,000 annual salary as a business expense. The IRS disallows the deduction upon examination of Francene’s tax return. Which of the following supports IRS position? a. All-Inclusive Income Concept b. Annual Accounting Period Concept c. The Angus Young Doctrine d. Realization Concept e. Substance Over Form Doctrine 4. An excise tax I. Is levied on the value of property II. Is levied on the quantity of the product or service III. Differs from a sales tax, because a sales tax is imposed on the value of property a. Only statement I is correct b. Only statement II is correct c. Statements I and II are correct d. Statements II and III are correct e. Statements I, II and III are correct. 5. Which of the followings are types of IRS examinations?
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This note was uploaded on 04/27/2011 for the course ACCT 3401 taught by Professor Adam during the Spring '11 term at Minnesota.

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Taxation Exam 1 - 1. Hank bought a small ranch for $300,000...

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