1)In computing MACRS depreciation, salvage value is considered
a)True
b)False
2)To be deductible for tax purposes, a trade or business expenditure must be for a cash basis taxpayer:
a)Ordinary, Necessary, Reasonable
b)Ordinary, Necessary, Reasonable, Justified
c)Ordinary, Necessary, Reasonable, Paid
d)Ordinary or necessary
3)Job-seeking expenses are deductible if incurred by an individual who is presently employed and looking for work in the same trade or business
a)Only if the individual actually finds a new job
b)Regardless of whether the individual finds a new job
c)If the expenses relate to the individual's first job
d)Both (a) and (b)
e)None of the answers provided are correct
4)Which of the following types of taxes is/are not deductible?
a)state property taxes
b)state income taxes
c)cigarette taxes
d)none of the answers are correct
e)at least 3 answers are correct
5)During the holiday season, a taxpayer gives business gifts to 25 customers. The gifts have the following fair market values: 7 gifts of property valued at $10 each 5 gifts of property valued at $20 each 13 gifts of property valued at $50 each How much can the taxpayer deduct for business gifts?
a)312.50
b)495
c)625
d)247
e)none
6)A calendar-year corporation incurs $4,000 of start-up costs. If the corporation began business on August 1 of the current year, what is the maximum amount of the start-up costs that it can deduct against business income in the current year? (round your answer to the nearest dollar)
a)3417
b)5000
c)2000
d)6333
e)4000
7)Five-year property costing $50,000 was placed in service on June 11 (along with other assets placed in service throughout the year) of the current year. The property is depreciated using MACRS. Assuming the company elects not to take advantage of either bonus depreciation or the Code Sec. 179 deduction and the mid-quarter convention applies. What will be depreciation expense with regard to the 5 year property for the current year
a)625
b)5000
c)4375
d)3045
e)12500
8) During 2013, Klecker, Inc. placed in service $2,700,000 of Code Sec. 179 property. How much can Klecker elect to immediately expense in 2013 related to 179?
a)2100000
b)0
c)400000
d)500000
e)none
f)100000
9)Hobby revenue $60,000. Hobby expenses are $80,000. AGI is $500,000. The amount of hobby expense that would be deductible on Schedule A is (ignoring phase-outs but not floor)
a)0
b)60000
c)40000
d)50000
10)Janet owns a 100 shares of stock which was purchased on January 4, 2013 for $84/share. On December 31, 2013 the stock was selling for $52/ share. The loss recognized for tax purposes is
a)0
b)32/share
c)84/share
d)none
11)Stock owned by a brother is sold to his sister. The brother's adjusted basis of the stock is $22,000. He sells the stock for $19,000. The sister sells the stock to an unrelated party for $17,000. What is the gain recognized by the sister
a)Her basis is $17,000. The price she paid for it. She sold it for $19,000. She recognizes a gain of $2,000.
b)Because of the situation, she only has a $1,000 recognized loss
c)She takes the brother's basis in the stock and recognizes the $1,000 gain
d)none
12)XXXXX XXXXX uses a dry cleaning machine in her business, and it was completely destroyed by fire. At the time of the fire, the adjusted basis was $30,000 and its fair market value was $18,000. How much is Ann's loss?
a)18000
b)2000
c)30000
d)none
13)During 2013, Hugh Hughes reported the following income and loss:
Activity X
($40,000)
Activity Y
$20,000
Both Activity X and Activity Y are passive to Mr. Hughes. How much is the loss that Mr. Hughes may deduct in 2013?
a)50000
b)30000
c)3000
d)0
e)none
14)Billy Ray owns several parcels of rental real estate (a passive activity), and he actively participates in managing the properties. His total loss from these activities in 2013 is $20,000. Assuming that his AGI for 2013 is $40,000, what is the allowable deduction from these properties in 2013?
a)0
b)25000
c)20000
d)none
15)When a taxpayer incurs a business NOL in 2013 the taxpayer may:
a)Has to carry the NOL forward instead of back
b)Must either to elect to carry it back 2 years or carry the NOL forward 20 years
c)Carry the NOL back five years
d)all of the above
16)Net operating losses can be increased by which of the following?
a)standard deductions
b)medical deductions
c)personal property tax paid
d)none
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a)True
b)False
2)To be deductible for tax purposes, a trade or business expenditure must be for a cash basis taxpayer:
a)Ordinary, Necessary, Reasonable
b)Ordinary, Necessary, Reasonable, Justified
c)Ordinary, Necessary, Reasonable, Paid
d)Ordinary or necessary
3)Job-seeking expenses are deductible if incurred by an individual who is presently employed and looking for work in the same trade or business
a)Only if the individual actually finds a new job
b)Regardless of whether the individual finds a new job
c)If the expenses relate to the individual's first job
d)Both (a) and (b)
e)None of the answers provided are correct
4)Which of the following types of taxes is/are not deductible?
a)state property taxes
b)state income taxes
c)cigarette taxes
d)none of the answers are correct
e)at least 3 answers are correct
5)During the holiday season, a taxpayer gives business gifts to 25 customers. The gifts have the following fair market values: 7 gifts of property valued at $10 each 5 gifts of property valued at $20 each 13 gifts of property valued at $50 each How much can the taxpayer deduct for business gifts?
a)312.50
b)495
c)625
d)247
e)none
6)A calendar-year corporation incurs $4,000 of start-up costs. If the corporation began business on August 1 of the current year, what is the maximum amount of the start-up costs that it can deduct against business income in the current year? (round your answer to the nearest dollar)
a)3417
b)5000
c)2000
d)6333
e)4000
7)Five-year property costing $50,000 was placed in service on June 11 (along with other assets placed in service throughout the year) of the current year. The property is depreciated using MACRS. Assuming the company elects not to take advantage of either bonus depreciation or the Code Sec. 179 deduction and the mid-quarter convention applies. What will be depreciation expense with regard to the 5 year property for the current year
a)625
b)5000
c)4375
d)3045
e)12500
8) During 2013, Klecker, Inc. placed in service $2,700,000 of Code Sec. 179 property. How much can Klecker elect to immediately expense in 2013 related to 179?
a)2100000
b)0
c)400000
d)500000
e)none
f)100000
9)Hobby revenue $60,000. Hobby expenses are $80,000. AGI is $500,000. The amount of hobby expense that would be deductible on Schedule A is (ignoring phase-outs but not floor)
a)0
b)60000
c)40000
d)50000
10)Janet owns a 100 shares of stock which was purchased on January 4, 2013 for $84/share. On December 31, 2013 the stock was selling for $52/ share. The loss recognized for tax purposes is
a)0
b)32/share
c)84/share
d)none
11)Stock owned by a brother is sold to his sister. The brother's adjusted basis of the stock is $22,000. He sells the stock for $19,000. The sister sells the stock to an unrelated party for $17,000. What is the gain recognized by the sister
a)Her basis is $17,000. The price she paid for it. She sold it for $19,000. She recognizes a gain of $2,000.
b)Because of the situation, she only has a $1,000 recognized loss
c)She takes the brother's basis in the stock and recognizes the $1,000 gain
d)none
12)XXXXX XXXXX uses a dry cleaning machine in her business, and it was completely destroyed by fire. At the time of the fire, the adjusted basis was $30,000 and its fair market value was $18,000. How much is Ann's loss?
a)18000
b)2000
c)30000
d)none
13)During 2013, Hugh Hughes reported the following income and loss:
Activity X
($40,000)
Activity Y
$20,000
Both Activity X and Activity Y are passive to Mr. Hughes. How much is the loss that Mr. Hughes may deduct in 2013?
a)50000
b)30000
c)3000
d)0
e)none
14)Billy Ray owns several parcels of rental real estate (a passive activity), and he actively participates in managing the properties. His total loss from these activities in 2013 is $20,000. Assuming that his AGI for 2013 is $40,000, what is the allowable deduction from these properties in 2013?
a)0
b)25000
c)20000
d)none
15)When a taxpayer incurs a business NOL in 2013 the taxpayer may:
a)Has to carry the NOL forward instead of back
b)Must either to elect to carry it back 2 years or carry the NOL forward 20 years
c)Carry the NOL back five years
d)all of the above
16)Net operating losses can be increased by which of the following?
a)standard deductions
b)medical deductions
c)personal property tax paid
d)none
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