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 fraudulent return for 2013 on December 25, 2014. When will the statute of limitations expire for their 2013 return?
April 15, 2018
October 15, 2016
April 15, 2015
None of the above
Question 3. Which of the following statements best describes the definition of taxable income from business operations?
Gross income from the sales of goods or performance of services less allowable deductions
Gross income from whatever source derived less allowable deductions
Revenues from business transactions less expenses
Gross income from whatever source derived less expenses
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.
Tax basis reflects the asset's fair market value.
Question 5. Under the current law, the child tax credit is refundable to all families with children
at least 16 years of age.
under the age of 16.
over the age of 16.
None of the above
Question 6. Which of the following sources of tax law carries the least authority?
Revenue ruling
Treasury regulation
Code Section 162 of the Internal Revenue Code
Equal authority for all three
Question 7. Which of the following is an example of a transaction-based tax?
A tax on net business income
A tax based on property value
An excise tax
All of the above
Question 8. Which of the following statements does not describe the classical standard of tax efficiency?
An efficient tax encourages full employment.
An efficient tax is a neutral factor in a free market economy.
An efficient tax does not change taxpayer behavior
None of the above.
Question 9. Laura Company, a cash basis business, received $17,000 as payment on a loan that was made 3 years ago. The original principal amount was $15,000. How much income should Laura Company recognize?
$2,000
$15,000
$17,000
$0
Question 10. The federal judicial system encompasses
judicial authority.
statutory authority.
administrative authority.
All of the above
Question 11. Compute taxable income for Standard Company is based on the following data.
Book income $30,000
Tax depreciation in excess of book depreciation 2,200
Meals and entertainment expense 1,400
Penalties 500
$33,400
$32,400
$29,000
$28,000
Question 12. John exchanged an old asset with an $18,000 adjusted basis plus $2,000 for a new asset with a $32,000 fair market value. Compute the amount of John's recognized gain if the new and old assets are like-kind properties.
$0
$2,000
$14,000
$12,000