Income Tax II test 1 - Review of attempt 1 Started on...

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Review of attempt 1 Started on Wednesday, February 8, 2012, 06:50 PM Completed on Wednesday, February 8, 2012, 07:04 PM Time taken 13 mins 36 secs Grade 12.00 out of a maximum of 20.00 ( 60 %) Question 1 Marks: 1.00 A sale of Code Sec. 1244 stock results in ordinary income if sold at a gain. Answer: True False Correct Marks for this submission: 1.00/1.00. Question 2 Marks: 1.00 Dick, Bev and Mollie form Murphy Corporation. Dick transfers land worth $80,000 (adjusted basis is $25,000) for 80 shares, Mollie transfers $40,000 cash for 40 shares and Bev transfers equipment worth $40,000 (adjusted basis is $16,000) and $40,000 of services for 80 shares. Bev’s tax consequences are: Choose one answer. a. Recognized Gain- $64,000; Basis in 80 shares- $80,000 b. Recognized Gain- $40,000; Basis in 80 shares- $56,000 c. Recognized Gain- $24,000; Basis in 80 shares- $40,000 d. Recognized Gain- $0; Basis in 80 shares- $16,000 Correct Marks for this submission: 1.00/1.00. Question 3 Marks: 1.00 Dave formed Shull Company and transferred land ($100,000 fair market value; $40,000 adjusted basis) and equipment ($50,000 fair market value; $10,000 adjusted basis) in exchange for 100 shares of stock. Shull Company assumes the $45,000 mortgage on the land as part of the transfer. Dave’s tax consequences are: Choose one answer.
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a. Recognized Gain- $0; Basis in 100 shares- $50,000 b. Recognized Gain- $5,000; Basis in 100 shares- $0 c. Recognized Gain- $50,000; Basis in 100 shares- $60,000 d. Recognized Gain- $100,000; Basis in 100 shares- $100,000 Incorrect Marks for this submission: 0.00/1.00. Question 4 Marks: 1.00 Finest Company is negotiating a compensation package with its president, Ann. Finest's accountant is worried that the firm will not be able to deduct the full amount of compensation as a business expense. Ann is willing to arrange the package in such a manner so that it would be fully deductible by the firm (except for certain items such as incentive stock options). In order to achieve this: Choose one answer. a. the full amount of the compensation package must be performance based b. only the noncash portion of the compensation must be performance based c. only the bonus portion of the compensation must be performance based d. only compensation in excess of $1,000,000 must be performance based Incorrect Marks for this submission: 0.00/1.00. Question 5 Marks: 1.00 Future, Inc. reported the following results for the year: Net income per books $110,000 Federal income taxes 36,170 Life insurance proceeds on key employee 15,000 Tax-exempt interest income 13,000 Net capital loss 25,000 Future's taxable income for the year was: Choose one answer.
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a. $123,170 b. $143,170 c. $72,000 d. $135,000 e. $107,000 Correct Marks for this submission: 1.00/1.00. Question
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Income Tax II test 1 - Review of attempt 1 Started on...

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