Final exam - 248/250 1. Question: (TCO E) For federal tax...

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248/250 1. Question: (TCO E) For federal tax purposes, royalty income which is not derived in the ordinary course of a business is classified as: Your Answer: Portfolio income Active income Passive income None of the above 2. Question: (TCO D) Which of the following is not an example of a nontaxable like-kind exchange? Your Answer: An ice cream making machine for inventory of Rocky Road ice cream. Land for an office building. A printer for a computer. The trade of an apartment building for a store building. 3. Question: (TCO H) Al and Amy file a joint return for the 2007 tax year. Their adjusted gross income is $80,000. They had net investment income of $8,000. In 2007, they had the following interest expenses: Personal credit card interest $4,000 Home mortgage interest $8,000 Investment interest (on loans used to buy stocks) $10,000 What is the interest deduction for Al and Amy for the 2007 tax year? Your Answer: $8,000 $12,000 $16,000 $18,000 4. Question: (TCO B) Charitable contribution deductions for Capital Gains Property made by individuals without a reduction for long-term capital gains to public charities are limited to: Your Answer: 50% of AGI 40% of AGI 30% of AGI 20% of AGI 5. Question: (TCO A) The following taxes were paid by Tim: Real estate taxes on his home: $1,000 State income taxes: $900 State gasoline tax (personal use of automobile): $150 In itemizing his deductions, what is the amount that Tim may claim as a deduction for taxes? Your Answer: $2,000 $3,050 $0
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$1,900 6. Question: (TCO E) Josh sold a piece of business equipment that had an adjusted basis to him of $50,000. In return for the equipment, Josh received $90,000 cash and a painting with a fair market value of $20,000 from the buyer. The buyer also assumed Josh's $25,000 loan on the equipment. Josh paid $5,000 in selling expenses. What is the amount of Josh's gain on the sale? Your Answer: $90,000 $135,000 $75,000 $80,000 7. Question: (TCO I) Ben's property, which has an adjusted basis of $25,000, is condemned by the state government. The authorities replace his property with other qualified property which cost them $120,000. What is Ben's recognized gain? Your Answer: $35,000 $85,000 $120,000 $0 8. Question: (TCO I) Under the cash method of tax accounting, tax deductions are generally taken when: Your Answer: The liability arises Payment is made The expense is actually incurred None of the above 9. Question: (TCO D) Sean, a calendar year taxpayer, purchased stock on June 18, 2006, for $8,000. The stock became worthless on June 4, 2007. What is Sean's loss in 2007? Your Answer: $8,000 short-term capital loss No loss $8,000 long-term capital loss $8,000 itemized deduction for investments 10 . Question:
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This note was uploaded on 02/21/2012 for the course ACCOUNTING 451 taught by Professor Douglasletsch during the Spring '11 term at DeVry Phoenix.

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Final exam - 248/250 1. Question: (TCO E) For federal tax...

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