Quiz 1 y Quiz 2 correjido - Quiz 1 correjido Grade Details...

Quiz 1 correjido
Grade Details
1. Question:
(TCO A) A taxpayer may litigate a tax dispute without first paying the tax in the:
Your Answer:
U.S. District Court
U.S. Tax Court
CORRECT
U.S. Court of Federal Claims
All of the above
Instructor
Explanation:
Chapter 2
Points
Received:
6 of 6
2. Question:
(TCO F) A business bad debt is deductible for tax purposes as a(n):
Your Answer:
Short-term capital loss
Ordinary business deduction
CORRECT
Long-term capital loss
Business casualty loss
Instructor
Explanation:
Chapter 6. IRC Sec. 166.
Points
Received:
6 of 6
3. Question:
(TCO I) Under the cash method of tax accounting, tax deductions are generally taken
when:
Your Answer:
The liability arises
The taxpayer elects to take the deduction
Payment is made
CORRECT
None of the above
Instructor
Explanation:
Chapter 13. Under the cash basis, deductions are generally taken for the year in
which the related expenditures were actually paid.
Points
Received:
6 of 6
4. Question:
(TCO A) Which of the following does not constitute tax evasion?

Your Answer: Arranging your affairs to keep your tax liability as low as
possible under the tax law.
Trying to legitimately maximize profits.
Trying to legitimately minimize your tax liability.
All of the above.
CORRECT
Instructor
Explanation:
Chapter 1. Once a transaction is completed, it must be disclosed.
Points
Received:
6 of 6
5. Question:
(TCO C) Which of the following items is not subject to federal income tax?
Your Answer:
Interest on U.S. Treasury bonds.
Gambling winnings.
Interest on loans made in the ordinary course of business.
Life insurance proceeds.
CORRECT
Instructor
Explanation:
Chapter 5. Life insurance proceeds are excluded from gross income. IRC Sec. 101.
Points
Received:
6 of 6
6. Question:
(TCO B) Sam owes Bob $8,000. Bob cancels (forgives) the debt. The cancellation is
not a gift and Sam is neither insolvent nor bankrupt. Which of the following statements
is correct concerning the impact of this transaction?
Your Answer:
Both Bob and Sam recognize $8,000 of taxable income.
Bob recognizes $8,000 of taxable income.
Sam recognizes $8,000 of taxable income.
CORRECT
Neither Bob nor Sam has any taxable income from this
transaction.
Instructor
Explanation:
Chapter 4. When a taxpayer's debt is forgiven (outside of bankruptcy), he recognizes
income equal to the amount forgiven.
Points
Received:
6 of 6
7. Question:
(TCO G) Jane purchased an annuity contract that pays her $800 per month. The
annuity cost her $50,000 and it has an expected return of $100,000. How much of
each monthly annuity payment is includible in Jane's gross income?
Your Answer:
$400
CORREC
T
$440
$500
$0
Instructor
Explanation:
Chapter 5. Exclusion ratio = 50,000 / 100,000 = 50%. Therefore, 50% of each annuity
payment is included in gross income. $800 x .50 = $400.

Points
Received:
6 of 6
8. Question:
(TCO F) Section 197 intangible assets such as goodwill are amortized for tax
purposes over:
Your Answer:
15 years
CORRECT ANSWER
3 years
6 years
Goodwill is not amortized
INCORRECT
Instructor
Explanation:
Chapter 6. IRC 197(a)
Points
Received:
0 of 6
9. Question:
(TCO E) Explain the Economic Benefit Doctrine.