Question 1. Debbie Edwards, a U.S. citizen using the calendar year as her tax year and making Italy her tax home, became a bona fide resident of Italy on November 3, 2013. Her salary in 2015 is $148,000. How much of her salary is subject to U.S. tax?
$46,800
$47,200
$46,825
$44,200
Question 2. Mr. and Mrs. Jones filed a complete and accurate return for 2014 on February 28, 2015. When will the statute of limitations expire for their 2014 return?
April 15, 2019
April 15, 2018
February 28, 2016
August 15, 2016
Question 3. Which of the following statements best describes the deduction of a business expense?
Not all business expenses are 100% deductible
All business expenses are 100% deductible
Business expenses must be paid in cash to be deductible
All purchases are tax deductible
Question 4. Which of the following statements about tax basis is false?
The tax basis in an asset can never be negative.
Tax basis represents the taxpayer's unrecovered dollars invested in the asset.
Every asset owned by the taxpayer has a tax basis.
None of the above
Question 5. Under the current law, individuals may claim the dependent care credit for dependents
at least 17, but not over 21 years of age.
under the age of 13.
over the age of 17 and in school.
None of the above
Question 6. Which of the following sources of tax law carries the most authority?
Revenue procedure
Treasury regulation
State Supreme Court decision
Supreme Court decision
Question 7. Which of the following is an example of an activity-based tax?
An excise tax
A tax based on business net income
A gift tax on the transfer of assets
None of the above
Question 8. The city of Chicago operated at a $1,000,000 deficit this year. The deficit suggests that the municipal tax system is
sufficient.
insufficient.
fair.
convenient.
Question 9. Susan Company, a cash basis business, received $14,000 as payment on a loan that was made 3 years ago. The original principal amount was $12,500. How much income should Susan Company recognize?
$0
$12,500
$14,000
$1,500
Question 10. The federal judicial system encompasses
judicial authority.
statutory authority.
administrative authority.
All of the above
Question 11. Compute taxable income for Green Company is based on the following data.
Book income $40,000
Tax depreciation in excess of book depreciation 3,700
Meals and entertainment expense 5,000
Penalties 400
$46,600
$39,200
$45,800
$40,800
Question 12. Mel exchanged an old asset with a $14,000 adjusted basis for a new asset with a $38,000 fair market value plus $4,000 cash. Compute the amount of Mel's recognized gain if the new and old assets are like-kind properties.
$0
$4,000
$28,000
$24,000