1. What are Susie's deductible moving expenses for 2013 if she spends $4,000 for packing and moving household goods, $1,200 to break the lease on her apartment, and $1,500 to store the household goods for 45 days? In April she drove her car 1,400 miles to her new home and spent $250 for motels and $80 for meals while traveling to the new home.
a. $4,586
b. $5,586
c. $6,166
d. $7,286
2. Carl, age 44, wants to contribute the maximum allowed to a Roth IRA. He is single and his AGI is $116,000. How much can he contribute to the Roth IRA?
a. $5,500
b. $4,033
c. $2,000
d. $1467
3. In April 2013, Tobias was assigned to a job in the next county for the day. He drove 75 miles each way to the job, paid $4 in tolls, $7 for parking and $9 for lunch. What is his allowable business expense deduction?
a. $84.70
b. $95.75
c. $100.25
d. $104.75
4. How much may Chico Corporation, a calendar year accrual basis corporation, deduct if it paid $3,000 on April 1 for an insurance policy for the next three years, prepaid six months interest of $450 on November 1, and paid $2,000 rent for December and January on December 1.
a. $1,900
b. $2,450
c. $2,600
d. $5,450
5. In 2012, Jasmin loaned her friend Janelle $5,000 to invest in various stocks. Janelle signed a note to repay the principal with interest. In 2013, the stock market plunged and Janelle incurred large losses. In late 2013, Janelle declared personal bankruptcy and Jasmin was unable to collect any of her loan. Jasmin had no other gains or losses in 2012 or 2013. Her income from wages in both 2012 and 2013 was $50,000. The result is:
a. Jasmin deducts a business bad debt of $5,000 in 2013.
b. Jasmin deducts a $5,000 capital loss in 2013.
c. Jasmin deducts a business bad debt of $3,000 in 2013 and carries $2,000 over to subsequent years.
d. Jasmin deducts a $3,000 capital loss in 2013 and carries $2,000 over to subsequent years.
e. Jasmin must amend her 2012 tax return to deduct the loss.
6. Joan gives an asset valued at $12,000 with a basis of $10,000 to Mary; Joan dies six months later leaving an asset valued at $10,000 with a basis of $12,000 to Larry. What are Mary's' and Larry's bases in these assets?
a. Mary = $12,000; Larry = $12,000
b. Mary = $12,000; Larry = $10,000
c. Mary = $10,000; Larry = $12,000
d. Mary = $10,000; Larry = $10,000
7. The first and last years of MACRS depreciation deductions for a 5 year asset costing $10,000 using the half year convention are:
a. $2,000 and $2,000
b. $2,000 and $1,152
c. $2,000 and $576
d. $2,000 and $1,000
8. Zachary purchased a new car on August 1, 2013 for $14,500. His records indicate that he uses the car 45 percent for business and 55 percent for personal use. What are his cost recovery deductions for 2013 and 2014?
a. $653; $1,305
b. $1,377; $2,205
c. $1,305; $2,088
d. $798; $1,595
9. Alpha Corporation had income from operations of $ 30,000. What is the corporation's taxable income including the following property transactions: Gain on investment stock = $8,000; loss on machinery held three years = $6,000; $4,000 loss on equipment held 10 months; $4,000 gain on land used for six years for storage of trucks.
a. $25,000
b. $27,000
c. $30,000
d. $32,000
10. Angel sells the following depreciable assets from her sole proprietor ship:Asset Cost Age Gain/Loss Office furniture $10,000 4 years ($2,400) Truck $20,000 5 years 3,100 Bakery equipment $25,000 9 months (4,500). What should Angel report on her income tax return relative to these property transactions?
a. $3,800 capital loss
b. $3,100 Section 1245 recapture; $2,400 Section 1231 loss; $4,500 ordinary loss.
c. $3,800 ordinary loss
d. $700 Section 1231 gain; $4,500 ordinary loss
e. None of the above
11. Abby has a $10,000 loss on some collectibles, a $5,000 Sec. 1202 gain, and an $11,000 gain on some securities. If all gains and losses are long term and Abby is in the 25 percent tax bracket, how is her net gain taxed?
a. $5,000 at 25%; $1,000 at 15%
b. $6,000 at 15%
c. $5,000 at 28%; $1,000 at 15%
d. $6,000 at 28%
e. None of the above
12. James corporation exchanges a building (fair market value = $800,000, adjusted basis = $600,000) that has a $100,000 mortgage for another building owned by Pete Corporation (fair market value = $1,100,000, adjusted basis = $600,000) that is encumbered by a $400,000 mortgage. Each party assumed the mortgage on the building received. What are James's and Pete's realized gains on this exchange, respectively?
a. $200,000, $500,000 or A
b. $200,000, $600,000
c. $500,000, $600,000
d. $500,000, $500,000
e. None of the above