Final - FINAL EXAM 674(1 True/False Indicate whether the...

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FINAL EXAM 674 (1) True/False Indicate whether the statement is true or false. ____ 1. Kim dies owning a passive activity with a basis of $75,000, a fair market value of $140,000, and suspended losses of $80,000. An $80,000 passive loss can be deducted on Kim’s final income tax return. ____ 2. For purposes of computing the credit for child and dependent care expenses, the qualifying employment- related expenses are limited to an individual’s actual or deemed earned income. ____ 3. If the buyer assumes the seller’s liability on the property acquired, the seller’s amount realized is decreased by the amount of the liability assumed. ____ 4. The maximum amount for the § 121 exclusion (exclusion of gain on sale of principal residence) that can reduce taxable income for an unmarried taxpayer is $250,000 and for a married taxpayer is $500,000. ____ 5. Quela, who is single, sells her principal residence which she has owned and occupied for 8 years. Prior to the sale, she made certain repairs to the house. In addition, she incurred realtor’s commissions and attorney fees associated with the sale. Quela can reduce the amount realized by the cost of the repairs, the realtor’s commission, and the attorney’s fee. ____ 6. Original issue discount is amortized over the life of the bond. ____ 7. A lease cancellation payment received by a lessee is generally not treated as an exchange because the lease extinguished is not a capital asset. ____ 8. Lease cancellation payments received by a lessor are always ordinary income because they are considered to be in lieu of rental payments. ____ 9. The net capital gain included in an individual taxpayer’s AMT base is eligible for the alternative tax rate on net capital gain. ____ 10. In 2010, Daniel exercised an incentive stock option (ISO), acquiring stock with a fair market value of $210,000 for $165,000. His AMT basis for the stock is $210,000, his regular income tax basis for the stock is $165,000, and his AMT adjustment is $45,000 ($210,000 – $165,000). ____ 11. Thrush Corporation files Form 1120, which reports taxable income of $110,000. The corporation’s tax is $26,150. ____ 12. A partnership must provide any information to the partners that the partners would need to calculate deductions not permitted at the partnership level, such as for oil and gas depletion or the corporate dividends received deduction. ____ 13. Partner Bob purchased his partnership interest for $10,000. If Bob sells the partnership interest after three years, his gain or loss is determined by reference to this unadjusted $10,000 cost basis.
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____ 14. Nina and Sue form an equal partnership during the current year. Nina contributes cash of $130,000, and Sue contributes property (adjusted basis of $100,000, fair market value of $250,000) subject to a nonrecourse liability of $120,000. As a result of these transactions, Sue has a basis in her partnership interest of $50,000. ____ 15.
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Final - FINAL EXAM 674(1 True/False Indicate whether the...

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