1. In the case of theft of a bond the allowable loss is reduced by:
a. $100 floor.
b. 10% of AGI.
c. 2% of AGI.
d. $100 floor and 10% of AGI.
e. None of the above.
2. During the year, Brad's personal residence was damaged by fire. Brad was insured for 90% of his actual loss, and he received the insurance settlement. Brad had adjusted gross income, before considering the casualty item, of $30,000. Pertinent data with respect to the residence follows:
Cost basis $160,000
Value before casualty 210,000
Value after casualty 20,000
What is Brad's allowable casualty loss deduction?
a. $0.
b. $13,900.
c. $14,000.
d. $34,000.
e. None of the above.
3. In 2010, Sandra was involved in an automobile accident. Her car was used 100 percent for business use. The car had originally cost $25,000. At the time of the accident, it was worth $14,000 and Sandra had taken $2,000 of depreciation. After the accident, it was worth $4,000. The car was not insured. If Sandra's AGI is $25,000 (before considering the loss), determine her itemized deduction for the casualty loss.
a. $19,000.
b. $3,000.
c. $2,900.
d. $-0-.
e. None of the above.
4. During the past two years, through advertising as well as extensive research and development and improved customer relations, Turquoise Corporation estimated that it had developed customer goodwill worth $200,000. For the current year, 2010, determine the amount of goodwill Turquoise Corporation may amortize.
a. $6,668.
b. $10,000.
c. $13,334.
d. $40,000.
e. None of the above.
5. On January 15, 2010, Jennifer purchased the rights to a mineral interest for $10,000,000. At that time, it was estimated that the recoverable units would be 2,500,000. During the year, 300,000 units were mined and 175,000 units were sold for $4,000,000. Jennifer incurred expenses during 2010 of $1,000,000. The percentage depletion rate is 22 percent. Determine Jennifer's depletion deduction for 2010.
a. $1,500,000.
b. $1,200,000.
c. $880,000.
d. $700,000.
e. None of the above.
6. Jeffrey is the city sales manager for Rock n Roll, a national cd and dvd franchise. Every working day, Jeffrey drives his car as follows:
Miles Home to office 6
Office to Rock n Roll No. 1 22
Rock n Roll No. 1 to No. 2 14
Rock n Roll No. 2 to No. 3 11
Rock n Roll No. 3 to home 9
Jeffrey's deductible mileage is:
a. 0 miles.
b. 9 miles.
c. 47 miles.
d. 62 miles.
7. Harold is the regional manager for a national chain of auto-parts stores and is based in Durango, Colorado. When the company opens new stores in Pagosa Springs, Harold is given the task of supervising their initial operation. For three months, he works weekdays in Pagosa Springs and returns home on weekends. He spends $350 returning to Durango but would have spent $320 had he stayed in Pagosa Springs for the weekend. As to the weekend trips, how much, if any, qualifies as a deduction?
a. $0, since the trips are personal and not work related.
b. $0, since Harold's tax home has changed from Durango to Pagosa Springs.
c. $320.
d. $350.
e. None of the above.
8. Marty works as an auditor for a major CPA firm. During the months of August and September of each year, he is permanently assigned to the team auditing Bison Corporation. As a result, every day he drives from his home to Bison and returns home after work. Mileage is as follows:
Miles Home to office 7
Home to Bison 12
Office to Bison 5
For the period of August and September, Marty's deductible mileage for each workday is:
a. 10.
b. 14.
c. 23.
d. 24.
e. None of the above.
9. Penelope, who holds a bachelor of education degree, is a middle school teacher in Aurora, North Carolina. The school board recently changed its minimum education requirement by prescribing five years of college training. Existing teachers, such as Penelope, are allowed 5 years in which to acquire the additional year of education. Pursuant to this requirement, Penelope spends her 2010 summer break attending University of North Carolina taking education courses. Her expenses are as follows:
Books and tuition $6,500
Meals 800
Lodging 800
Laundry while in travel status 350
Transportation 950
Her education expense deduction is:
a. $9,400.
b. $9,000
c. $8,650.
d. $6,500.
e. None of the above.
10. Which, if any, of the following expenses is not a miscellaneous itemized deduction subject to the 2 percent floor?
a. Union dues.
b. Tax preparation fee.
c. Gambling losses to the extent of gambling winnings.
d. Safe deposit box fee.
e. All of the above.