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uestion 1 (8 points)

Section 179 expense is subtracted from the property's basis before the MACRS depreciation is computed. Question 1 options: 1) True 2) False Save

Question 2 (8 points)
Bonus depreciation cannot be taken on property used 50% or less for business. Question 2 options: 1) True 2) False Save

Question 3 (8 points)
Individual taxpayers deduct expenses related to a rental activity from gross income to arrive at AGI. Question 3 options: 1) True 2) False Save

Question 4 (8 points)
Regardless of the number of passive activities the taxpayer owns, taxpayers file only one Form 8582. Question 4 options: 1) True 2) False Save

Question 5 (8 points)
A taxpayer cannot recognize the loss on the sale of stock if the taxpayer purchases substantially identical stock within 60 days before or 60 days after the sale. Question 5 options: 1) True 2) False Save

Question 6 (8 points)
For purposes of the wash sale rules, substantially identical securities are always securities in the same company. Question 6 options: 1) True 2) False Save

Question 7 (8 points)
An individual's current year capital loss from investment property not offset against capital gains and ordinary income is carried forward indefinitely. Question 7 options: 1) True 2) False Save

Question 8 (8 points)
An individual's net long-term capital losses retain their long-term status when carried over to a future year. Question 8 options: 1) True 2) False Save

Question 9 (8 points)
The monthly penalty for failing to file a timely tax return is less severe than the monthly penalty for late payment of taxes. Question 9 options: 1) True 2) False Save

Question 10 (8 points)
Employers with more than 10 full-time equivalent (FTE) employees must reduce their small employer health insurance credit by 4% for each FTE employee in excess of 10. Question 10 options: 1) True 2) False Save

Question 11 (8 points)
Residential realty costing $100,000 is placed in service in 2000. MACRS for 2012 is: Question 11 options: 1) $2,500. 2) $2,564. 3) $3,175. 4) $3,636. 5) $14,286. Save

Question 12 (8 points)
What is the maximum depreciation in 2012 for a new computer used 100% for business acquired on July 2, 2012, for $3,000? Assume Section 179 is not elected and that this is the only property placed in service during 2012.

Question 12 options: 1) $3,000 2) $600 3) $300 4) $1,500 5) $1,800 Save

Question 13 (8 points)
On July 1, 2011, a taxpayer enters into a 36-month lease. The terms of the lease require the taxpayer to pay $1,000 a month. Based on the value of the automobile, the inclusion amounts for 2011, 2012, and 2013 are $313, $590, and $602, respectively. If the taxpayer uses the car 70% for business, what net amount can be deducted for lease expense in 2012? Question 13 options: 1) $7,987 2) $5,705 3) $11,587 4) $12,000 5) $4,920 Save

Question 14 (8 points)
The MACRS basis of 5-year property acquired on March 3, 20X1 is $10,000. No Section 179 or bonus depreciation is taken on the property. The property is sold on November 4, 20X2. If the half-year convention applies to personal property acquired in 20X1 and regular (accelerated) MACRS is used, depreciation expense for 20X2 is: Question 14 options: 1) $2,000. 2) $1,000. 3) $1,600. 4) $3,200.

5) $2,800. Save

Question 15 (8 points)
The MACRS basis of 5-year property acquired on January 13, 20X1 is $10,000. No Section 179 or bonus depreciation is taken on the property. The property is sold on July 31, 20X3. If the halfyear convention applies to personal property acquired in 20X1 and the regular (accelerated) MACRS method is used, depreciation expense for 20X3 is: Question 15 options: 1) $2,000. 2) $1,920. 3) $1,600. 4) $960. 5) $800. Save

Question 16 (8 points)
A taxpayer acquires a business on June 1 of the current year. Included in the purchase price was $12,000 for the purchase of a three-year covenant not to compete. The taxpayer's amortization expense with respect to the covenant for the current year is: Question 16 options: 1) $800. 2) $4,000. 3) $467. 4) $2,333. 5) none of the above. Save

Question 17 (8 points)
Which of the following uses of a dwelling unit does not count as personal use? Question 17 options:

1) The taxpayer's parents use the unit for two weeks and pay a fair rental price. 2) The dwelling is rented to a friend for less than a fair rental price. 3) The taxpayer stays at the dwelling while working full-time to replace the roof. 4) All of the above count as personal use. 5) None of the above count as personal use. Save

Question 18 (8 points)
A taxpayer is active in three different passive activities, none of which are real estate rental activities. The income (loss) from these activities follows: Activity A B C Income or (Loss) $10,000 (20,000) (30,000)

The passive loss carryover attributable to Activity B is: Question 18 options: 1) $0. 2) $10,000. 3) $20,000. 4) $24,000. 5) none of the above Save

Question 19 (8 points)
A taxpayer reports the following income and losses from these passive activities: Activity A B Income or (Loss) $(40,000) (10,000)

20,000

The suspended (carryover) loss for Activity A is: Question 19 options: 1) $0. 2) $40,000. 3) $24,000. 4) $16,000. 5) none of the above. Save

Question 20 (8 points)
A vacation home is rented out for 10 days during the year and used personally by the owner for 20 days during the year. What percentage of real estate taxes should be deducted on Schedule A? Question 20 options: 1) 0% 2) 33% 3) 67% 4) 100% 5) None of the above Save

Question 21 (8 points)
The special deduction for active participation in a rental real estate activity is computed on: Question 21 options: 1) Schedule A. 2) Schedule E. 3) Form 8332. 4) Form 8829.

5) Form 8582. Save

Question 22 (8 points)
In order to meet the material participation test for a rental real estate activity, over what percentage of the taxpayer's personal service rendered during the year must be rendered for a trade or business involving real estate? Question 22 options: 1) 10% 2) 25% 3) 50% 4) 75% 5) 80% Save

Question 23 (8 points)
Benito died on May 23, 2012, bequeathing his entire $3,000,000 estate to his brother, Alfonso. The executor of Benito's estate validly elected to use the alternative valuation date. Benito's estate included 4,000 shares of listed stock, for which Benito's basis was $500,000. The stock was distributed to Alfonso eight months after Benito's death. The fair market values of this stock on various dates follow: May 23, 2012 $600,000 November 23, 2012 550,000 January 23, 2013 530,000

Alfonso's basis in the stock is: Question 23 options: 1) $500,000. 2) $530,000. 3) $550,000. 4) $600,000.

5) None of the above. Save

Question 24 (8 points)
Tom purchased 1,000 shares of stock in his corporation for $20 a share. The FMV was $25 a share and Tom reported the $5,000 difference between FMV and amount paid in gross income. What is Tom' basis in the 1,000 shares? Question 24 options: 1) $0 2) $5,000 3) $20,000 4) $25,000 5) Not enough information is provided to answer this question Save

Question 25 (8 points)
Which of the following is not taken into consideration in computing the seller's amount realized from the exchange of property? Question 25 options: 1) Debt that the buyer assumes 2) Commissions paid by the seller 3) Legal fees paid by the seller in conjunction with the sale 4) All of the above are taken into consideration in computing amount realized 5) None of the above are taken into consideration in computing amount realized Save

Question 26 (8 points)
In 2000, Darlene received stock worth $100,000 from her aunt. The aunt purchased the stock for $15,000 in 1970. Using the $100,000 value of the stock, the aunt paid $30,000 of gift tax on the transfer. Darlene's basis in the stock is: Question 26 options:

1) $15,000. 2) $40,500. 3) $45,000. 4) $100,000. 5) $130,000. Save

Question 27 (8 points)
Years ago, Fran purchased stock in ABC company for $33,000. Last year, Fran sold the stock to her son, Steve, for $25,000 (its current market value). Steve later sells the shares for $20,000. Steve's adjusted basis in the stock and his recognized gain or loss on the sale are: Question 27 options: 1) $33,000adjusted basis, $13,000 recognized loss 2) $33,000adjusted basis, $5,000 recognized loss 3) $25,000adjusted basis, $13,000 recognized loss 4) $25,000adjusted basis, $5,000 recognized loss 5) $33,000adjusted basis, $0 recognized gain Save

Question 28 (8 points)
Nate sold his principal residence for $400,000. He paid commissions totaling $20,000. Nate purchased the home 15 years ago for $110,000. Over the years, he has spent $13,000 on improvements and $22,000 on repairs to the home. Nate's recognized gain is: Question 28 options: 1) $0 2) $20,000. 3) $7,000. 4) $270,000. 5) $257,000. Save

Question 29 (8 points)

A married taxpayer sells 5,000 shares of Section 1244 stock ("small business corporation" stock) at a loss of $150,000. How will this loss be treated on a joint return? Question 29 options: 1) $150,000 ordinary loss 2) $150,000 capital loss 3) $50,000 ordinary loss and $100,000 capital loss 4) $100,000 ordinary loss and $50,000 capital loss 5) None of the above Save

Question 30 (8 points)
A taxpayer sold land for $80,000. It originally cost $60,000. Selling expenses were $4,000. The proceeds are to be collected in installments over a four-year period. The taxpayer received $30,000, plus interest, in the current year. Under the installment method of reporting income, how much gain should be recognized in the current year? Question 30 options: 1) $4,000 2) $5,000 3) $6,000 4) $16,000 5) None of the above Save

Question 31 (8 points)
Land purchased for $60,000 in 2000 and used in the taxpayer's business is sold in the current year for $67,000. The sale of the land results in: Question 31 options: 1) $7,000 of short-term capital gain. 2) $7,000 of long-term capital gain 3) $7,000 of ordinary income.

4) $7,000 of Section 1231 gain. 5) none of the above Save

Question 32 (8 points)
An individual purchased an apartment building for use in a business for $300,000 in 2004. The building was sold for $350,000 in October 2012. Depreciation taken was $84,000. If there is no other Section 1231 gain (loss) during the year, how will the gain on the sale of this apartment building be treated? Question 32 options: 1) $134,000 15% long-term capital gain 2) $84,000 15% long-term capital gain; $50,000 25% long-term capital gain 3) $50,000 15% long-term capital gain; $84,000 25% long-term capital gain 4) $134,000 25% long-term capital gain 5) None of the above Save

Question 33 (8 points)
Equipment used in the taxpayer's business is purchased in 2009 for $50,000. It was sold in 2012 for $22,000. Depreciation information is as follows: Accelerated depreciation taken $23,758 Straight-line depreciation (7-year life) would have been 21,500

What is the gain or loss on the sale of this equipment, and how will it be treated on the tax return? Question 33 options: 1) $4,242 Section 1231 loss 2) $1,758 Section 1231 loss 3) $2,258 ordinary loss; $1,984 Section 1231 loss 4) $4,242 ordinary loss

5) $6,500 ordinary loss Save

Question 34 (8 points)
An unmarried taxpayer sells the following capital assets during the year. Property Date Acquired Date Sold Sales Price Adjusted Basis 1 6/4/11 4/6/12 $10,000 $14,000 2 1/8/10 12/15/12 15,000 17,000

The taxpayer carries over to the next tax year: Question 34 options: 1) a $4,000 short-term capital loss. 2) a $1,000 short-term capital loss and a $2,000 long-term capital loss. 3) a $3,000 short-term capital loss. 4) a $2,000 short-term capital loss and a $1,000 long-term capital loss. 5) A $3,000 long-term capital loss. Save

Question 35 (8 points)
A married couple sells the following capital assets during the year. Property Date Acquired Date Sold Sales Price Adjusted Basis 1 8/4/11 6/6/12 $15,000 $16,000 2 1/8/10 1/15/12 28,000 17,000 3 8/9/11 9/8/12 2,000 8,000

The couple's net capital gain is: Question 35 options: 1) $4,000. 2) $12,000.

3) $5,000. 4) $11,000. 5) None of the above Save

Question 36 (8 points)
Al started a qualified child care program for his employees in 2010. In the current year, he spent $5,000 on qualified child care expenditures and $500 in qualified child care referral expenses. Al's current year employer-provided child care credit is: Question 36 options: 1) $550. 2) $1,000. 3) $1,300. 4) $1,375. 5) $1,500. Save

Question 37 (8 points)
Which of the following credits are not part of the general business credit? Question 37 options: 1) Rehabilitation credit 2) Disabled access credit 3) Work opportunity tax credit 4) Employer-provided child care credit 5) All of the above are part of the general business credit Save

Question 38 (8 points)
During 2012, Jane hired a veteran with service-related disabilities to help her out in her business. The veteran had been unemployed for 8 weeks in the year leading up to the hire date. He was

paid $36,000 during his first year, of which $18,000 was paid in 2012. Jane's wounded warrior's tax credit (part of the work opportunity credit) for 2012 is: Question 38 options: 1) $9,600. 2) $4,800. 3) $5,600. 4) $2,400. 5) $7,200. Save

Question 39 (8 points)
Which of the following statements is incorrect regarding the small employer pension plan startup credit? Question 39 options: 1) The maximum credit allowed each year is $500. 2) The credit is available for the first five years in which the new pension plan is offered. 3) The credit is not available to employers who have maintained a qualified pension plan during any of the past three years.

4) To be eligible for the credit, a new pension plan must be established. 5) All of the above statements are correct. Save

Question 40 (8 points)
Jeff paid $75 a share for 1,000 shares of stock under an incentive stock option plan where he works. At the time he exercised his option, the stock was selling for $100 a share. For purposes of computing alternative minimum taxable income, which of the following statements is correct? Question 40 options: 1) Jeff must add back to regular taxable income $75,000. 2) Jeff must add back to regular taxable income $25,000. 3) Jeff must subtract from regular taxable income $75,000. 4) Jeff must subtract from regular taxable income $25,000.

5) None of the above. Save

Question 41 (8 points)
A married couple files a joint return. The couple has no net capital gain or qualified dividend income. The couple's AMT base (amount subject to AMT) is $275,000 and their regular income tax liability is $48,500. The couple's AMT for 2012 is: Question 41 options: 1) $73,500. 2) $71,500. 3) $25,000. 4) $23,000. 5) $61,404. Save

Question 42 (8 points)
Which of the following statements is correct with respect to the penalty associated with the failure to report an accurate information return that is corrected within 30 days of the due date? Question 42 options: 1) 2) 3) 4) 5) Save $30 per return with a yearly maximum of $50,000 for businesses other than small businesses. $50 per return with a yearly maximum of $100,000 for businesses other than small businesses. $60 per return with a yearly maximum of $200,000 for businesses other than small businesses. $50 per return with a yearly maximum of $500,000 for businesses other than small businesses. $30 per return with a yearly maximum of $250,000 for businesses other than small businesses.

Question 43 (8 points)

The penalty imposed on tax preparers for preparing a return in which the tax preparer intentionally disregards the rules and regulations is: Question 43 options: 1) the greater of $5,000 or 50% of the income derived (or to be derived) from the return. 2) the lesser of $5,000 or 50% of the income derived (or to be derived) from the return. 3) the greater of $1,000 or 50% of the income derived (or to be derived) from the return. 4) the lesser of $1,000 or 50% of the income derived (or to be derived) from the return. 5) None of the above. Save

Question 44 (8 points)
For purposes of computing depreciation on the taxpayer's home for the home office deduction, the depreciable basis of the home is: Question 44 options: 1) the taxpayer's adjusted basis in the home at the time it is converted to a home office. 2) the fair market value of the home at the beginning of the tax year. 3) the fair market value of the home at the time it is converted to a home office. 4) the lesser of a. or c. 5) the lesser of a. or b. Save

Question 45 (8 points)
Intangible property acquired as part of an acquisition of a business, is amortized over: Question 45 options: 1) 15 years. 2) the remainder of the property's useful life. 3) the lesser of a. or b. 4) the greater of a. or b. 5) none of the above. Save

Question 46 (8 points)
In December 2012, a taxpayer leased out property for three years, receiving $600 for the December rent and $600 for January's rent. A refundable security deposit of $500 was also received. How much rental income should be reported in 2012? Question 46 options: 1) $600 2) $1,100 3) $1,200 4) $1,700 5) None of the above. Save

Question 47 (8 points)
A taxpayer rents out a vacation home for 30 days and uses it for personal use 20 days. Gross rental income was $6,000 and expenses incurred for the year were: Mortgage interest $3,600 Real estate taxes 1,200 Utilities 600 Maintenance 720 Depreciation 4,800

Depreciation carryover to the next tax year is: Question 47 options: 1) $0. 2) $552. 3) $2,472. 4) $2,800. 5) $4,800. Save

Question 48 (8 points)

Patty converted her principal residence to rental property two years ago when it was worth $70,000. Patty paid $85,000 for the house. What is Patty's basis in the house if after taking $10,000 of depreciation deductions she sells it for $66,000? Question 48 options: 1) $60,000 2) $66,000 3) $70,000 4) $75,000 5) $85,000 Save

Question 49 (8 points)
Which of the following is not included in the taxpayer's basis in business property? Question 49 options: 1) Sales taxes paid with the purchase 2) Title insurance paid with the purchase 3) Amounts paid to have the property installed 4) Amounts paid to have the property delivered to the taxpayer's business 5) All of the above are included in the taxpayer's basis Save

Question 50 (8 points)
Joel's principal residence is destroyed in a fire in a federally declared disaster area. The insurance company compensates Joel for his loss in 2012, which produces a $350,000 realized gain. How long does Joel have to purchase a new principal residence and avoid being taxed on the gain? Question 50 options: 1) December 31, 2012 2) December 31, 2013 3) December 31, 2014 4) December 31, 2015

5) December 31, 2016 Save

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