Chapter 4 Quizzes (1) - 1 Marks: 1 Troy, a cash basis...

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1 Marks: 1 Troy, a cash basis taxpayer, owns an office building. His records reflect the following for 2011. On March 1, 2011, office B was leased for twelve months. A $900 security deposit was received which will be used as the last month's rent. On September 30, 2011, the tenant in office A paid Troy $3,600 to cancel the lease expiring on March 31, 2011. The lease of the tenant in office C expired on December 31, 2011, and the tenant left improvements valued at $1,400. The improvements were not in lieu of any required rent. Considering just these three amounts, what amount must Troy include in rental income on his income tax return for 2011? Choose one answer. a. $5,900 b. $5,000 c. $4,500 d. $1,800 $4,500 ($900 + $3,600) *This question has been adapted from the IRS Examinations. Correct Marks for this submission: 1/1. Question 2 Marks: 1 A scholarship received by a student that represents compensation for past, present, or future services is includible in gross income. Answer: True False * This question has been adapted from the IRS Examinations. Incorrect Marks for this submission: 0/1. Question 3 Marks: 1 Alex Burg, a cash basis taxpayer, earned an annual salary of $80,000 at Ace Corp. in 2011, but elected to take only $50,000. Ace, which was financially able to pay Burg's full salary, credited the unpaid balance of $30,000 to Burg's account on the corporate books in 2011, and actually paid this $30,000 to Burg on April 25, 2012. How much of the salary is taxable to Burg in 2011? Choose one answer. a. $50,000 b. $60,000 c. $65,000 d. $80,000 Alex had an absolute right to $80,000 in 2011; therefore, he has to include it in his 2011 gross income. This is an example of the constructive receipt doctrine. * This question has been adapted from the IRS Examinations. Incorrect Marks for this submission: 0/1.
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Question 4 Marks: 1 Under the terms of their divorce agreement executed in October 2011, Keith transferred Corporation M stock to his former wife, Karen, as a property settlement. At the time of the transfer, the stock had a basis to Keith of $20,000 and a fair market value of $50,000. What is the tax consequence of this transaction to Keith, and what is Karen's basis in the Corporation M stock? Choose one answer. a. Keith has a gain of $30,000; Karen's basis is $20,000. b. Keith has a gain of $30,000; Karen's basis is $50,000. c. Keith has no gain or loss; Karen's basis is $20,000. d. Keith has no gain or loss; Karen's basis is $50,000. No gain or loss is recognized on the transfer of property as part of a divorce settlement. * This question has been adapted from the IRS Examinations. Incorrect Marks for this submission: 0/1. Question 5 Marks: 1 With regard to stock dividends, all of the following statements are correct except: Choose one answer. a. Stock dividends are distributions made by a corporation of its own stock.
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Chapter 4 Quizzes (1) - 1 Marks: 1 Troy, a cash basis...

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