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Question: Hirsch, Incorporated, is a calendar year


Hirsch, Incorporated, is a calendar year corporation that has had revenues of less than $500,000 since inception. In 2017, Hirsch had a net operating loss that \Vas able to be used in full via a carryback to 2016. For 2018, Hirsch expects to have taxable incon1e of $100,000. How w ill Hirsch avoid a penalty for underpayment of estimated Federal taxes in the current year'
a. Hirsch must pay 100% of the tax shown on its 2018 return via estimated taxes to avoid an underpayment penalty.
b. Hirsch must pay the amount of taxes owed on its 2017 return via estimated taxes to avoid an underpayn1ent penalty.
c. Hirsch must pay 9001o of the tax shown on its 2018 return via estin1ated taxes to avoid an underpayment penalty.
d. Hirsch may pay the lower of the amount of taxes owed in 2017 or 100% of the tax shown on the return for 2018 via estimated taxes to avoid an underpayment penalty.


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> On November 1, 2008, Janet Morton and Kim Wong formed Pet Kingdom, Inc., to sell pets and pet supplies. Pertinent information regarding Pet Kingdom i5 summarized as follows. • Pet Kingdom's business address is 1010 Northwest Parkway, Da

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> John Parsons (123-45-6781) and George Smith (123-45-6782) are 70%, and 30%, owners, respectively, of Premium, Inc. (11-1111111), a candy company located at 1005 16th Street, Cut and Shoot, TX 77303. Premium's S election was made on January 15, 2010, its

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> Linda is an employee of JRH Corporation. Which of the following is included in Linda's gross income? a. Premiums paid by JRH Corporation for a group term life insurance policy for $50,000 of coverage for Linda. b. $l ,000 of tuition paid by JRH Corporat

> Kim was seriously injured at her job. As a result of her injury, she received the following payments. • $5,000 reimbursement from employer-provided health insurance for medical expenses paid by Kim. The premiums this year paid by Kim's employer totaled $

> For many years, Sophie has owned and operated several apartn1ent buildings. In 2012, upon the advice of her attorney, Sophie transferred the apartment buildings to a newly created corporation. Her main reason for incorporating the business was to achieve

> Stephen is a graduate student at West University. He works part time at the campus coffee shop earning $5,000 this year. Stephen also receives a $25,000 scholarship that pays for his tuition, fees, and books. What amount does Stephen include in his gross

> Section 1250 recapture applies to which of the following? a. Section 1231 real property sold at a gain with accumulated depreciation in excess of straight line. b. Section 1231 personal property sold at a gain with accumulated depreciation. c. Section 12

> Section 1245 recapture applies to which of the following? a. Section 1231 real property sold at a gain with accumulated depreciation in excess of straight line. b. Section 1231 personal property sold at a gain with accumulated depreciation. c. Section 12

> Net Section 1231 losses are: a. Deducted as a capital loss against other capital gains and nothing against ordinary income. b. Deducted as a capital loss against other capital gains and up to $3,000 against ordinary income. c. Not allowed as a deduction

> Wally, Inc., sold the following three personal property asset5 in year 6: What is Wally's net Section 1231 gain or loss in year 6? a. $500 loss b. $300 gain c. $800 gain d. $1,600 gain Asset Purchase Date Cost Accumulated Depreciation Selling Price

> A piece of depreciable machinery is sold. It has been held for three years and qualifies as Section 1231 property. The selling price is greater than the adjusted basis but less than the original purchase price. Which statement below is correct? a. All o

> In the current tax year, Blake Smith provided more than half of the support for his cousin, niece, and a close family friend. Blake lives alone and sends a monthly support check to each person. None of the individuals whom Blake supports has any income o

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> Brad and Angie are married and file a joint return. For year 14, they had income from wages in die amount of $100,000 and had the following capital transactions to report on their income tax return: What is the amount of capital loss carryover to year

> Herbert was employed for the first six months of 2018 and earned $90,000 in salary. During the next six months, he collected $8,800 of unemployn1ent compensation, borrowed $12,000 (using his personal residence as collateral), and withdrew $2,000 fron1 hi

> Conner purchased 300 shares of Zinco stock for $30,000 in year 1. On May 23, year 6, Conner sold all the stock to his daughter Alice for $20,000, its tl1en fair market value. Conner realized no other gain or loss during year 6. On July 26, year 6, Alice

> A gain on the sale of which of the following assets will not result in a capital gain? a. Stock in a public company b. A home used as a personal residence c. Goodwill of a corporation d. Inventory of a corporation

> Marsha exchanged land in Florida with an FMV of $72,700 and an adjusted basis of $40,000 for land in lowa with an FMV of $57,700. Marsha also assumed a $5,000 liability on the land received in the transaction and was relieved of a $20,000 liability on th

> Marsha exchanged land in Florida with an FMV of $72,700 and an adjusted basis of $40,000 for land in Iowa with an FMV of $57,700. Marsha also paid $5,000 cash in the transaction and received an automobile worth $20,000. What is Marsha's recognized gain o

> Chad owned an office building that was destroyed in a tornado. The adjusted basis of the building at the time was $890,000. After the deductible, Chad received an insurance check for S950,000. He used S900,000 of the insurance proceeds to purchase a new

> Chad owned an office building that was destroyed in a tornado. The adjusted basis of the building at the time was $890,000. After the deductible, Chad received an insurance check for $850,000. He used the $850,000 to purchase a new building that same yea

> Agnes sold 50 shares of ABC stock to her son, Steve, in year 4 for $42,000. She bought the stock eight years ago for $50,000. Steve sold the stock to an unrelated parry in year 6 for $60,000. How much gain will Steve recognize from the sale in year 6? a.

> Rick purchased 100 shares of XYZ stock on April 4, year 4, for $8,600. He sold 50 shares on Febn1ary 8, year 5, for $3,000. He then bought another 50 shares of XYZ on March 1, year 5, for $3,200. How much loss will Rick realize in year 5? a. $0 b. $1,30

> Jerry inherits an asset from his uncle, who purchased the asset five days before he died. Which of the following statements is correct? a. If Jerry sells the asset a few days after receiving it, any gain or loss on the sale will be short term. b. Jerry's

> Alice gifted stock to her son, Bob, in year 5. Alice bought the stock in year 1 for The value of the stock on the date of gift was $6,400. Bob sold the stock in year 7 for $ 15,800. What is Bob's recognized gain or Joss on the sale in year 7? a. $0 b. $7

> Emmy contributes $40,000 to MeldCo in exchange for a 30% ownership interest. During the first year of operations, MeldCo earns a profit of $200,000. At the end of that year, MeldCo holds liabilities of $75,000. Calculate Emmy's basis for her ownership in

> Danny received the following interest and dividend payments this year. What amount should Danny include in his gross incon1e? Source Amount $1,200 City of Atlanta bond interest U.S. Treasury bond interest State of Georgia bond interest Ellis Compan

> Which statement below is correct? a. Real property is depreciated using the half-year convention. b. Residential real estate is depreciated over a 39-year life. c. One-half month of depreciation is taken for the month that real property is disposed of. d

> Data, Inc., purchased and placed in service $5,000 of office furniture on August 24, year 3. This is the only asset purchase during the year. Section 179 expensing was not elected. Using the excerpt of the MACRS half-year convention table below, what is

> Data, Inc., purchased and placed in service a $5,000 computer on August 24, year 3. This is the only asset purchase during the year. Section 179 expensing was not elected. The computer was sold during year 5. Using the excerpt of the MACRS half-year conv

> Sam rents his second home. During the current year, he reported a $40,000 net loss from the rental. Assume Sam actively participates in the rental activity and no phase out lin1itations apply. What is the greatest amount of the rental loss that Sam can d

> What is the correct order of applying the loss limitation rules? a. Passive loss limits, tax basis, at-risk amount b. Tax basis, at-risk amount, passive loss limits c. At-risk an1ount, tax basis, passive loss limits d. Passive loss limits, at-risk amount

> An apartment building was acquired in 2009 by an individual taxpayer. The depreciation taken on the building was $123,000, and the building was sold for a $34,000 gain. What is the maximum amount of 25%gain?

> Sissie owns two items of business equipment. Both were purchased in 2014 for $100,000, both have a 7-year MACRS recovery period, and both have an adjusted basis of $37,490. Sissie is considering selling these asset5 in 2018. One of them is worth $60,000,

> Jacob purchased business equipment for $56,000 in 2015 and has taken $35,000 of regular MACRS depreciation. Jacob sells the equipment in 2018 for $26,000. What is the amount and character of Jacob's gain or loss?

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> Amy, Becky, and Chau form a business entity with each contributing the following. Their ownership percentages will be as follows. Becky's land has a $20,000 mortgage that is assumed by the entity. Chau is an attorney who receives her ownership intere

> Elliott has the following capital gain and loss transactions for 2018. After the capital gain and loss netting process, what is the amount and character of Elliott's gain or loss? $ 1,500 Short-term capital gain Short-term capital loss (3,600) Long

> Celine has the following capital gain and loss transactions for 2018. After the capital gain and loss netting process, what is the amount and character of Celine's gain or loss? $ 5,000 Short-term capital gain Short-term capital loss (2,100) Long-t

1.99

See Answer