Ch 3 11 & 5 T-F Questions Key

Ch 3 11 & 5 T-F Questions Key - CHAPTER 3 1....

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CHAPTER 3 1. Rachael purchased 300 shares of Smelt, Inc. stock for $25 per share. At the end of the year, the stock price has risen to $30 per share. Rachael does not recognize taxable income even though there has been a $1,500 increase in wealth. ANS: T PTS: 1 DIF: Easy OBJ: 1 NAT: AICPA Measurement | AACSB Analytic 2. Julian is operating an illegal gambling operation. Even though the income is not legal, it is classified as earned. ANS: T PTS: 1 DIF: Medium OBJ: 2 NAT: AICPA Measurement | AACSB Analytic 3. An accrual basis taxpayer does not have income until there is an actual or constructive receipt of income earned. ANS: F PTS: 1 DIF: Medium OBJ: 2 NAT: AICPA Measurement | AACSB Analytic 4. For any unrecovered portion of an annuity investment, the taxpayer is allowed a deduction in the year of death. ANS: T PTS: 1 DIF: Medium OBJ: 2 NAT: AICPA Measurement | AACSB Analytic 5. The holding period for receiving long-term capital gain treatment is 12 months or more. ANS: F PTS: 1 DIF: Medium OBJ: 5 NAT: AICPA Measurement | AACSB Analytic 6. Mercedes has a net long-term capital gain of $3,000 and a net short-term capital loss of $10,000. She can deduct $3,000 of the $7,000 net loss as a deduction for adjusted gross income in the current year. She must defer realizing any tax benefit from the remaining $4,000 loss until the next year. ANS: T
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Ch 3 11 & 5 T-F Questions Key - CHAPTER 3 1....

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