Question 6. 6. (TCO E) Adam sold a piece of business equipment that had an adjusted basis to him of $50,000. In return for the equipment, Adam received $80,000 cash and a painting with a fair market value of $20,000 from the buyer. The buyer also assumed Adam's $25,000 loan on the equipment. Adam paid $5,000 in selling expenses. What is the amount of Adam's gain on the sale? (Points : 5) $90,000 $125,000 $80,000 $70,000 Question 7. 7. (TCO I) Gary and Gerdy Gray purchased a home for $125,000 on September 15, 2010. On October 7, 2011 they were divorced, and as part of the divorce agreement, the home was transferred to Gerda, who sold the home on October 18, 2012 for $350,000. How much can Gerda
exclude? (Points : 5) $350,000 $250,000 $225,000 $0 Question 8. 8. (TCO I) Under the accrual method of accounting, expenses are generally accrued when: (Points : 5) the expenses are actually incurred. the taxpayer elects to take the deduction. payment is made. None of the above Question 9. 9. (TCO D) Steve, a calendar year taxpayer, purchased stock on November 18, 2011 for $17,000. The stock became worthless on January 4, 2012. What is Steve's loss in 2012? (Points : 5) $17,000 short-term capital loss No loss $17,000 itemized deduction for investments $17,000 long-term capital loss Question 10. 10. (TCO A) Which of the following is a primary source of tax authority? (Points : 5) Revenue ruling Tax Court case Temporary regulation
All of the above Question 11. 11. (TCO F) A deduction for salaries and wages can include: (Points : 5) bonus payments. payments for services performed in prior years. advance payments for services to be performed in future years. both bonus payments and payments for services performed in prior years. Question 12. 12. (TCO A) The IRS levies penalties for which of the following? (Points : 5) Bouncing checks Fraud Late filing All of the above Question 13. 13. (TCO C) In return for $1,000, Mr. Hand cancels Mr. Sandwich's debt of $4,000. The cancellation is not a gift, and Mr. Sandwich is neither insolvent nor bankrupt. Which of the following statements is correct?
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- Winter '15
- Taxation in the United States