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1. Household income for purpose of the premium tax credit includes all of the following except:
AGI of the taxpayer, AGI of the taxpayer’s dependents, Any tax-exempt income, Untaxed Social Security benefits, All of the above are included in household income
2. William, a cash-basis sole proprietor, had the following receipts and disbursements for 2015:
Gross receipts $50,000
Cost of sales 30,000
Other operating expenses 5,000
Medical expenses 600
For 2015, what amount should William report as net earnings from self-employment?
50,000-30000-15000= 15,000$
3. Caprice is a single 42-year-old with income of $12,000 in 2015. She lacked minimum essential coverage for 7 months in 2015. What is her individual shared responsibility payment amount?
55.44
4. The Dot Corporation has changed its year-end from a calendar year-end to August 31. The income for its short period from January 1 to August 31 is $54,000. The tax for this short period is:
10,572$
5. On January 1, 2015, Roxburgia Company places a commercial storage building in service. The costs allocated to construction of the building total $300,000 and land is accounted for separately. Which of the following is a true statement with respect to the depreciation of the building?
d. The depreciation expense for Year 2 would be the same regardless of whether the building is placed in service on January 1, 2015 or February 1, 2015.
6. Which of the following miscellaneous deductions are not subject to the 2 percent of adjusted gross income limitation?
a. Unreimbursed employee business expenses
b. Investment expenses
c. Unrecovered annuity costs at death
d. Union dues
e. None of the above
7. For the current tax year, David, a married taxpayer filing a joint return, reported the following:
Investment income from interest $24,000
Investment expenses other than interest $ 3,000
Interest expense on funds borrowed 10 years ago to purchase investment property $70,000
What is the maximum amount that David can deduct in the current year as investment interest expense?
24,000-3,000= 21,000
8. On January 1, 2015, Sandy, a sole proprietor, purchased for use in her business a used production machine (7-year property) at a cost of $4,000. Sandy does not purchase any other property during 2015 and has net income from her business of $80,000. If the standard recovery period table would allow $572 of depreciation expense on the $4,000 of equipment purchased in 2015, what is Sandy’s maximum depreciation deduction including the Section 179 election to expense (but not bonus depreciation) for 2015?
4,000$
9. For the current tax year, Morgan had $25,000 of ordinary income. In addition, he had an $1,900 long-term capital loss and a $1,600 short-term capital loss. What will be the amount of Morgan’s capital loss carryforward to the next year?
1900+1600=3500 only(500)
10. Which of the following statements is true?
d. None of the above are true.
11. Stan, a single taxpayer, has $1,700 of state income taxes withheld from his wages in the current year. In the current year, he also received a $320 refund on his prior year state income tax. Stan did not itemize last year but he intends to do so this year. Stan used the sales tax estimate tables and determined his sales tax deduction amount is $1,600. What amount should Stan deduct for state taxes?
1700$
12. Which of the following assets is not a Section 1231 asset?
d. Inventory
13. Cork Oak Corporation purchased a heavy-duty truck (not considered a passenger automobile for purposes of the listed property and luxury automobile limitations) on May 1, 2015 for use in its business. The truck, with a cost basis of $24,000, has a 5-year estimated life. It also is 5-year recovery property. How much depreciation should be taken on the truck for the 2015 calendar tax year using the conventional (for financial accounting purposes) straight-line depreciation method?
3,200$
14. Which of the following interest expense amounts is not deductible 2015?
a. Education loan interest of $2,000, assuming the taxpayer is single and has income of $150,000.
15. Section 197 intangibles:
Are amortized over a 15-year period, Include goodwill, going-concern value, and information bases, Were defined in the Revenue Reconciliation Act of 1993, Are not amortized over the actual estimated useful life of the intangible asset.
16. Weber resides in a state that imposes a tax on income. The following information relating to Weber’s state income taxes is available:
State income taxes withheld in 2015 $3,000
Refund received in 2015 of 2014 tax $ 300
Assessment paid in 2015 of 2013 tax $ 800
Assuming he elects to deduct state and local income taxes, what amount should Weber use as state and local income taxes in calculating itemized deductions for his 2015 Federal income tax return?
3,800$
17. Roberta and Sally formed the Alder Corporation on October 1, 2015. On the same date, Roberta paid $75,000 cash to Alder Corporation for 1,500 shares of the corporation’s common stock. Simultaneously, Sally received 100 shares of Alder Corporation’s stock for services rendered. How much should Sally include in her taxable income for 2015, and what will be the basis of her Alder Corporation stock?
Taxable Income Basis of Stock
5000$ 5000$
18. For its year ended December 31, 2015, Cupressa Corporation, an S corporation, had net income of $216,000 which included $180,000 of ordinary income from operations and a $36,000 net long-term capital gain. During 2015, 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 2015, each shareholder should report:
20,000 ordinary income and 4,000 net long term capital gain
19. Mark the correct answer. In cash basis accounting, for tax purposes:
c. Income is generally recognized when it is actually or constructively received and expenses are generally recognized when they are paid.
20. Which of the following statements is correct with respect to the deferral provisions of the tax law?
b. The involuntary conversion provision is elective.
21. Which one of the following is true about Modified Accelerated Cost Recovery System (MACRS)
c. A light duty business truck is depreciated using accelerated depreciation.
22. During the current year, Seth, a self-employed individual, paid the following taxes:
Federal income tax $5,000
State income tax $2,500
Real estate taxes on land in South America (held as an investment) $ 1,000
Personal property taxes based upon value $ 1,500
Federal self-employment tax $ 800
What amount can Seth claim as an itemized deduction for taxes paid during the current year, assuming he elects to deduct state and local income taxes?
5000$
23. Which of the following is not a requirement for qualification as an S corporation?
b. The corporation must have 25 or fewer shareholders.
24. An asset has an original basis of $25,000 and depreciation has been claimed for the asset in the amount of $20,000. If the asset’s adjusted basis is $15,000, what is the amount of capital improvements that have been made to the asset?
10,000$
25. ABC Company owns 40 percent of JMT Company and 95 percent of DEM Company. JMT pays a $80,000 dividend to ABC and DEM pays a $40,000 dividend to ABC in the current year. Assuming that ABC has $1,000,000 of taxable income, calculate ABC’s dividends received deduction for the current year.
1400$
26. Which of the following is not deductible as a medical expense on Schedule A?
b. Payments for marriage counseling
27. Which of the following companies is taxed at a flat rate of 35 percent?
b. A consulting corporation of owner-employee CPAs with taxable income of $1,000,000.
28. From the records of Tom, a cash basis sole proprietor, the following information was available:
Gross receipts $ 30,000
Dividend income (on personal investments) 200
Cost of sales 15,400
Other operating expenses 3,000
State business taxes paid 300
What amount should Tom report as net earnings from self-employment?
11,300