1. Which of the following is not a capital asset?
a. Inventory
b. stocks
c. a personal automobile
d. gold
e. land
2. For 2012, the maximum percentage of Social Security benefits which must be included in a taxpayer's gross income is?
a. 0%
b. 50%
c. 65%
d. 85%
e. 100%
3. Which of the following would result in life insurance proceeds that are taxable to the recipient?
a. A life insurance policy transferred to a creditor in payment of a debt
b. A life insurance policy in which the insured is the daughter of the taxpayer and the beneficiary is the taxpayer
c. A life insurance policy transferred by a shareholder to a corporation
d. A life insurance policy purchased by a taxpayer insuring his or her business partner
e. A life insurance policy purchased by a corporation insuring an officer.
4. For its year ended December 31, 2012, Cupressa Corporation, an S corporation, had net income per books of $216,000 which included $180,000 from operations and a $36,000 net long-term capital gain. During 2012, a total of $90,000 was distributed to the corporation's nine equal shareholders, all of whom are on a calendar-year tax basis. For 2012, each shareholder should report:
a. $10,000 ordinary income and $2,000 net long-term capital gain
b. $20,000 ordinary income
c. $20,000 ordinary income and $4,000 net long-term capital gain
d. $24,000 ordinary income
e. none of the above