1.On January 1, 2013, Randolph signed a two year lease to rent office space from Zoff. The lease commenced immediately on January 1, 2013. During 2013, Randolph paid Zoff, $36,000 for the first year's rent, $3,000 for the last month's rent, and $3,000 as a security deposit. Randolph and Zoff agree that the security deposit will be returned by Zoff at the end of the lease. How much gross income should Zoff report for 2013 as a result of these items?
a) $36,000
b) $39,000
c) $42,000
d) $144,000
2.Ariadna and Alexander are married taxpayers who file a joint return. In 2012, they had AGI of $600,000 and their preliminary itemized deductions totaled $40,000. In 2013, they also had AGI of $600,000 and preliminary itemized deductions of $40,000. In 2012 and 2013 their itemized deductions include mortgage interest. Which of the following is TRUE?
a) When comparing their 2012 and 2013 returns, they will deduct the same amount of itemized deductions on each return
b) When comparing their 2012 and 2013 returns, they will deduct more itemized deductions on their 2012 return
c) When comparing their 2012 and 2013 returns, they will deduct more itemized deductions on their 2013 return
d) They will not deduct any itemized deductions on either their 2012 return or their 2013 return
3.In 2013, Bethsie, a calendar-year taxpayer, purchased business equipment (5-year property) for $700,000. The property was placed in service in January 2013 (and is being used exclusively in Bethsie's extremely profitable business). No other personal property is purchased by Bethsie in 2013. What is the most that Bethsie may deduct in 2013 under Section 179 of the Code (ignore any potential deductions resulting from bonus deprecation or MACRS)?
a) $140,000
b) $200,000
c) $500,000
d) $700,000