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1. Lewis, who is single, is claimed as a dependent on his parents' tax return. He received $1,000 during the year in dividends, which was his only

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1. Lewis, who is single, is claimed as a dependent on his parents’ tax return. He received $1,000 during the year in dividends, which was his only income. What is his standard deduction? a. $850 b. $1,000 c. $1,300 d. $5,150 2. Arthur pays tax of $3,000 on taxable income of $30,000 while taxpayer Barbara pays tax of $6,000 on $60,000. The tax is a a. progressive tax. b. proportional tax. c. regressive tax. d. None of the above. 3. When property is transferred, the gift tax is based on: a. replacement cost of the transferred property. b. fair market value on the date of transfer. c. the transferor’s original cost of the transferred property. d. the transferor’s depreciated cost of the transferred property. 4. Which one of the following items is not considered gross income for tax purposes? a. gambling winnings b. illegal income c. life insurance proceeds d. forgiveness of loan 5. All of the following are excluded from taxable income as a fringe benefit except: a. Christmas bonus check b. Group term life insurance c. Employee discount d. Contribution to retirement plans 6. Carter is the beneficiary of a $100,000 policy on the life of his mother. Carter sells the policy to his brother, Parker, for $30,000. Parker subsequently pays premiums of $15,000. Upon his mother’s death, how much of the insurance proceeds must Parker include in income?
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a. $0 b. $45,000 c. $55,000 d. $100,000 7. Hope receives a $8,500 per year scholarship from State University. The university specifies that $5,500 is for tuition, books, supplies, and equipment while $3,000 is for room and board. In addition, Hope works part-time at the campus library and earns $5,000 to cover other expenses. Hope’s gross income is a. $5,000. b. $8,000. c. $8,500. d. $13,500. 8. Antonio owns land held for investment with a basis of $28,000. The City of Lafayette exercises the right of eminent domain and Antonio receives a payment of $48,000. What is Antonio’s realized gain? a. $0 b. $20,000 c. $28,000 d. $48,000 9. Richard exchanges a building with a FMV of $75,000, a basis of $35,000, and subject to a liability of $25,000 for land with a FMV of $50,000 owned by Will. What is the amount of Richards’ realized gain? a. $0 b. $15,000 c. $25,000 d. $40,000 10. To be tax deductible, an expense must be all of the following except a. ordinary and necessary b. paid in cash. c. Reasonable in amount. d. An expense of the taxpayer. 11. Liam pays the following legal and accounting fees during the year: Legal fees in connection with a contract dispute in her trade or business $6,800 Legal fees related to resolving a tax deficiency related to business 4,000 Tax return preparation fees:
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