quiz4-6d - Marks: 1 In July 1996, Dan Farley leased a...

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Marks: 1 In July 1996, Dan Farley leased a building to Robert Shelter for a period of 15 years at a monthly rental of $1,000 with no option to renew. At that time, the building had a remaining estimated useful life of 20 years. Prior to taking possession of the building, Shelter made improvements at a cost of $18,000. These improvements had an estimated useful life of 20 years at the commencement of the lease period. The lease expired on June 30, 2011, at which point the improvements had a fair market value of $2,000. The amount that Farley, the landlord, should include in his gross income for 2011 is: Choose one answer. a. $6,000 b. $8,000 c. $12,000 d. $24,000 Farley must include $6,000 of rental income (6 months x $1,000) in his gross income for 2011. Improvements are considered at time of sale only. * This question has been adapted from the AICPA Examinations. Correct Marks for this submission: 1/1. Question 2 Marks: 1 In order to limit the extent that "front-loaded" payments may qualify as alimony, a recapture rule may apply to the part of the payments made in the first two post- separation years that exceed $25,000 a year. Answer: True False The amount of annual payments is limited to $15,000. * This question has been adapted from the IRS Examinations. Correct Marks for this submission: 1/1. Question 3 Marks: 1 Roger Burrows, age 19, is a full-time student at Marshall College and a candidate for a bachelor's degree. During 2011, he received the following payments:
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State scholarship for tuition $3,600 Loan from college financial aid office 1,500 Cash support from parents 3,000 Cash dividends on qualified investments 700 Cash prize award in contest 500 $9,300 What is Burrows's adjusted gross income for 2011? Choose one answer. a. $1,100 b. $1,200 c. $4,800 d. $9,300 Burrows's adjusted gross income for 2011 is $1,200, computed as follows: Cash dividends on qualified investments $ 700 Cash prize 500 Gross income $1,200 * This question has been adapted from the AICPA Examinations. Correct Marks for this submission: 1/1. Question 4 Marks: 1 Interest was credited to Jane's savings account on December 31, 2011. As long as Jane leaves the interest in the account and does not withdraw it, the interest is not taxable to her. Answer: True False
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It is taxable when it is credited to her account. Correct Marks for this submission: 1/1. Question 5 Marks: 1 Which of the following is considered a nonbusiness bad debt? Choose one answer. a. Tom, a CPA, made personal loans to several friends who were n the loans became totally worthless. b. Mary obtained a court-order for her former husband, Bill, to pay not pay the child support. c. Kirby guaranteed a loan as a gesture of friendship for Sue. Sue d paid off the loan. d. None of the above.
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This note was uploaded on 10/19/2011 for the course INCOME TAX 4404 taught by Professor Bulie during the Spring '11 term at University of Minnesota Duluth.

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quiz4-6d - Marks: 1 In July 1996, Dan Farley leased a...

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