Question: Rudy has the following capital gains and

> Ed and Cathy, both under age 50, file a joint return. Neither is covered under an employer pension plan. Cathy earned compensation of $53,000 in 2017. Ed worked part-time and earned $1,200. What is the maximum deductible IRA contribution they can mak

> Terri is single and age 32. She reported AGI of $64,000 in tax year 2017. She is an active participant in her employer’s pension plan. What is the maximum deductible IRA contribution she can make in 2017? a. $0. b. $1,100. c. $4,400. d. $5,500.

> Which of the following is an individual-sponsored pension plan? a. Defined benefit plan. b. Keogh plan. c. Roth IRA. d. SIMPLE plan.

> In a large food or beverage establishment, any tip shortfall from a directly tipped employee is recorded on the employee’s W-2 as a. W-2 box 8 - Allocated tips. b. W-2 box 14 - Other. c. W-2 box 1- Wages, tips, other compensation. d. W-2 box 7 - Social

> Carmen earned $75 in tips in September. When must she inform her employer of her tips on Form 4070 for federal income tax and FICA withholding purposes? a. By September 30. b. By October 10. c. By October 31. d. She is not subject to payroll taxes on t

> Dewoun has two jobs, and both employers withheld FICA tax. From his first job, he earned $102,100, and from his second job, he earned $28,200. How much can Dewoun claim as an additional payment on his Form 1040 as excess social security paid in 2017?

> Carlos earned a total of $225,000 for 2017. How much in FICA tax will his employer be required to withhold in his name? a. $10,834.50. b. $11,148.90. c. $11,373.90. d. $12,029.10.

> Adenike has two jobs and earned $ 110,000 from her first job and $20,000 from her second job. How much total FICA taxes will Adenike have withheld from her wages from working two jobs? a. $9,730.80. b. $9,732.00. c. $9,771.40. d. $9,945.00.

> Erica earned $128,800 during 2017. How much will her employer withhold from her, in total, for FICA taxes? a. $9,069.60. b. $9,214.60. c. $9,741.00. d. $9,754.00.

> Marla is married, is paid $2,565 semimonthly, and claims four withholding allowances. What is the amount of federal income tax withheld on Marla’s gross wages for the semimonthly period? a. $190.57. b. $197.50. c. $200.51. d. $207.56.

> Adam received a bonus of $4,400 from his employer. Which one of the following federal income withholding tax amounts is not in accordance with IRS rules regarding supplemental wage payments? Adam earns biweekly wages of $3,500, is single, and claims on

> A taxpayer with 2017 AGI of $160,000 has no income tax withholding and is required to pay estimated taxes. The taxpayer can avoid an underpayment penalty by paying a. At least 90% of the 2017 tax liability ratably over four quarterly payments. b. At le

> On January 2, 2017, Jane employed a part-time household worker in her home. She paid the household worker $350 per month for 2017. What amount of FICA tax is Jane required to record on Schedule H? a. $237.30. b. $321.30. c. $558.60. d. $642.60.

> Carol works for ABC Company and earned $63,000 for the entire 2017 year. How much in FUTA tax is her employer required to withhold in her name? Assume that the employer receives the maximum credit for state unemployment taxes. a. $0 . b. $42.00 c. $43

> Ely is single and is paid $1,190 per week and claims one allowance. What is the amount of federal income tax withheld on Ely’s gross wages for the week? a. $184. b $186. c. $203. d. $206.

> Adrienne is a self-employed attorney. She has net earnings (profit) from her practice of $106,800. Her self-employment taxes for the year are: a. $13,117.76. b. $13,338.85. c. $14,204.40. d. $15,090.36.

> Carlos has two jobs; he is an attorney (not a partner) in a law firm and he has a small legal practice (sole proprietorship) providing real estate legal services. How does he compute his federal income tax for the year? a. His wages from the law firm a

> Employers pay a maximum federal unemployment tax of 6.0% on how much of an employee’s taxable wages for 2017? a. $1,800. b. $3,800. c. $5,800. d. $7,000.

> Household employees are subject to FICA withholding if they are paid at least what amount during any calendar quarter in 2017? a. $1,500. b. $1,800. c. $1,900. d. $2,000.

> Employers are required to deposit FUTA taxes when their liability exceeds a. $100. b. $500. c. $1,000. d. $1,500.

> To what amount of employer tax accumulation does the one-day deposit rule apply? a. $75,000. b. $100,000. c. More than $100,000. d. An amount between $75,000 and $99,999.

> A semiweekly schedule depositor’s payroll period ends and is paid on Friday, June 24. The depositor (employer) must deposit the federal taxes for this pay period on or before a. The following Wednesday. b The following Friday c. June 25. d.June 29.

> What is the penalty for sending a required tax payment (unless specifically allowed) directly to the Internal Revenue Service? a. 2% . b. 5%. c. 10%. d. 15%.

> Lauer Company started its business on July 25, 2017. On August 11, it paid wages for the first time and accumulated a tax liability of $48,000. On Friday, August 18, it incurred a tax liability of $52,000. How is Lauer Company treated as a depositor?

> An employer will prepare Schedule B of Form 941 under which circumstances? a. Line 12 on the Form 941 is less than $2,500. b. The employer is a semi-monthly depositor. c. The employer is a monthly depositor. d. The employer is a semi-weekly depositor.

> Employees claim withholding allowances on Form W-4. Each withholding allowance claimed lowers their annual withholding base by what amount for calendar year 2017? a. $3,900. b. $3,950. c. $4,000. d. $4,050.

> Which of the following conditions must be met for a taxpayer to be able to claim the foreign tax credit (FTC) without filing Form 1116? a. All of the foreign-source income is passive income. b. All of the foreign-source income was reported on Form 1099.

> Which of the following expenses are qualifying expenses for purposes of the education credits? a. Books (purchased at the institution as a condition of enrollment). b. Tuition. c. Room and Board. d. Both (a) and (b).

> Terrance is age 71 and retired. Beginning in 2017, he must start taking minimum distributions from his IRA account that had a balance of $150,000 as of December 31, 2016. Make these three assumptions: his IRA will earn 8% per year; he will withdraw th

> On July 8, 2015, Joe and Jill sell their principal residence for $650,000. Their adjusted basis in the property is $275,000. To complete the sale, Joe and Jill have to take back a second mortgage for $120,000. The buyers borrow $465,000 from a local b

> The city of Stillcreek decides to expand the runway at the local airport. To get the land for the expansion, it condemns the property it needs and pays the owners the current appraised value. Buster's house is condemned, and he is paid $340,000 for his

> During the current year, the Harlow Corporation, which specializes in commercial construction had the following property transactions. Determine the realized and recognized gain or loss on each of Harlow’s property transactions and the basis of any prope

> At the beginning of 2017, Heather owns the following stocks: In addition to these stocks, Heather received 400 shares of Poor Boy preferred stock from her grandfather as a gift on December 25, 2016. The shares were selling for $25 per share on December

> Twenty years ago, Consuela Guererro invented and patented a high-speed burrito-stuffing machine. Through the years, she has jealously guarded her invention, allowing its use only in El Consuela's, a chain of restaurants in which she owns 60% of the stock

> Rosie has owned a successful luncheonette for several years. Tired of the long hours and eager to try another way of life, she decides to buy a fishing boat and start a charter service near Key West. The only obstacle is the sale of the following asset

> During August 2012, Madeline invests $400,000 in Qual Company, Inc., buying 100,000 shares of stock. Her broker tells her this will be an excellent investment because the securities are qualified small business stock. He predicts the stock will triple

> Return to the facts of problem 50. How would your answer change if Yorgi purchased the qualified small business stock in Gnu Company, Inc. on September 15, 2011, and sells the shares for $400,000 on December 31, 2017? Data from Problem 50: Return to th

> Return to the facts of problem 48. Assume that Yorgi purchased the qualified small business stock in Gnu Company, Inc., on September 15, 2009, and sells the shares for $400,000 on December 30, 2017. a. Determine the amount of realized and recognized g

> Return to the facts of Problem 48. Assume that Yorgi has a net capital loss of $80,000 from her other capital asset transactions in 2017. What is the effect of the sale of the stock on Yorgi’s tax liability if her marginal tax rate is 33%. Data from P

> Under what conditions may a taxpayer exclude a portion of a realized capital gain?

> Yorgi purchases qualified small business stock in Gnu Company, Inc., on September 15, 2008, for $50,000. She sells the shares for $400,000 on December 30, 2017. The stock retains its qualified small business status through the date of the sale. a. Det

> Jie has the following capital gains and losses during the current year: Short-term capital loss………………………………………$ 2,000 Collectibles gain…………………………………………………..3,000 Unrecaptured Section 1250 gain…………………………..8,000 Long-term capital gain……………………………………..12,0

> Samantha has the following capital gains and losses during the current year: Short-term capital loss……………………………..$ 7,000 Short-term capital gain…………………………………5,000 Collectibles loss……………………………………………11,000 Long-term capital gain………………………………….8,000 Long-t

> Loretta has the following capital gains and losses during the current year: Short-term capital loss……………………………………..$ 4,000 Collectibles gain…………………………………………………10,000 Long-term capital gain………………………………………..8,000 Long-term capital loss carryover………………………

> Rollie has the following capital gains and losses during the current year: Short-term capital gain……………………………$ 3,000 Collectibles gain………………………………………….4,000 Long-term capital gain………………………………11,000 Long-term capital loss………………………………..6,000 Rollie is m

> Troy has the following gains and losses from sales of capital assets during the current year. What is the effect of the capital asset transactions on his taxable income? Explain, and show any calculations. Short-term capital gain…………………$ 7,800 Short-t

> Tate has the following gains and losses from sales of capital assets during the current year. What is the effect of the capital asset transactions on Tate's taxable income? Explain, and show any calculations. Short-term capital gain………………….$ 3,600 Lo

> Return to the facts of problem 40. Assume that Judith is an individual taxpayer. What is the effect of the capital asset transactions on Judith's taxable income? Compare this result with the result in problem 40. Data from Problem 40: Judith Corporat

> Judith Corporation has the following gains and losses from sales of capital assets during the current year. What is the effect of the capital asset transactions on Judith's taxable income? Explain, and show any calculations. Short-term capital gain…………

> Evaluate the following statement: Corporations can never deduct net capital losses.

> For each of the following capital asset dispositions, determine whether the taxpayer has realized a gain or loss and whether that gain or loss is short-term or long-term: a. Larry's aunt June dies on May 4, 2017. He inherits some land that she purchased

> For each of the following capital asset dispositions, determine whether the taxpayer has realized a gain or loss on the disposition and whether that gain or loss is short-term or long-term: a. Ari receives some stock from his grandfather Stephan for Chri

> Mort begins investing in stocks in 2016. Listed here are his stock transactions for 2016 and 2017. Determine Mort's gain or loss on his stock transactions for 2016 and 2017. In addition, for each sale of stock, determine whether the gain or loss is sh

> Spencer purchases 100 shares of Reality Virtual Corporation common stock for $1,200 on July 30, 2017. He sells 75 shares of this stock for $525 on December 27, 2017. On January 12, 2018, Spencer purchases 300 shares of Reality Virtual stock for $2 per

> Classify each of the following assets as ordinary income property, capital asset property, Section 1231 property, or personal use property. If more than one classification is possible, explain the circumstances that would determine the proper classifica

> Classify each of the following assets as ordinary income property, capital asset property, Section 1231 property, or personal use property. If more than one classification is possible, explain the circumstances that would determine the proper classifica

> Return to the facts of problem 29. What tax-planning strategy can be used to achieve more favorable tax results? Use this strategy to determine Guerda's gain or loss on the sale. Data from Problem 29: Guerda owns 1,500 shares of Ditchdirt common stock

> Return to the facts of problem 29. Assume that Guerda sells the remaining 800 shares of Ditchdirt stock for $10 per share and pays a commission of $400 on the sale. What is her gain or loss on the sale? Data from Problem 29: Guerda owns 1,500 shares o

> Return to the facts of problem 29. Assume that Guerda later sells an additional 200 shares of the Ditchdirt stock for $20 per share, paying a commission of $600 on the sale. What is her gain or loss on the sale of the stock? Data from Problem 29: Gue

> Guerda owns 1,500 shares of Ditchdirt common stock. During the current year, she sells 500 shares of the stock for $15 per share and pays a commission of $300 on the sale. Guerda had purchased the 1,500 shares as follows: / What is

> What is (are) the current tax advantage(s) of selling an asset at a long-term capital gain?

> Elvira owns an office building, and Jared Partnership owns an apartment building. Each property is encumbered by a mortgage. Elvira and Jared Partnership agree to exchange their properties and mortgages, with any difference to be paid in cash. The fai

> During the current year, James sells some land he purchased in 2012 as an investment. He had paid $4,000 in cash and borrowed $22,000 to buy the land. He had paid legal fees of $440 and commissions of $560 on the purchase. He sells the land on October

> Determine the amount of gain or loss realized and the amount of gain or loss to be recognized in each of the following dispositions: a. Jorge owns 800 shares of Archer Company stock. He had purchased 300 of the shares for $9,000 and 500 of the shares fo

> Determine the amount of gain or loss realized and the amount of gain or loss to be recognized in each of the following dispositions: a. On October 1, Rufus Partnership sells land to Gerald for which it had paid $32,000. Gerald agrees to pay Rufus $15,00

> Tuyen is negotiating the sale of her lake front property near Wabasha. Nils is offering • Cash of $10,000 • A parcel of land near Red Wing valued at $5,000 with an adjusted basis of $3,000 • A ski boat valued at $9,000 with an adjusted basis of $15,000

> Determine the amount realized in each of the following property dispositions: a. Umberto wants to buy Kevin's truck. Because Umberto has no cash and cannot obtain a loan to finance the purchase, Kevin agrees to let Umberto pay him $320 a month for 6 mon

> Determine the amount realized in each of the following property dispositions: a. Herbert sells some land he owns to Elroy in exchange for $23,000 in cash and 2 breeding hogs worth $1,500 each (adjusted basis of $500 each). In closing the sale, Herbert i

> Alex purchases a building in 1986 at a cost of $500,000. ACRS depreciation on the building totals $320,000, whereas straight-line depreciation would be $260,000 for the same period. Alex sells the building for $620,000. a. What is Alex's gain on the sa

> Maria sells the automobile she uses in her job as a marketing representative for $3,000. The car cost $15,000 four years earlier. Maria uses the automobile 80% of the time in her job and 20% of the time for personal purposes. At the date of sale, Maria

> Avalon Inc., buys equipment costing $150,000 in 2014 and sells it in 2017. Avalon deducts $94,000 in depreciation on the equipment before the sale. What is the character of the gain or loss on the sale of the equipment if the selling price is a. $90,00

> Why is a distinction made between long-term capital gain (loss) property and short-term capital gain (loss) property?

> The Gladys Corporation buys equipment (7-year MACRS property) costing $658,000 on May 12, 2017. In 2020, new and improved models of the equipment make it obsolete, and Gladys sells the old equipment for $34,000 on December 27, 2020. a. What is the cha

> Rhinelander Corporation has the following net Section 1231 gains and losses for 2012 through 2016: 2012……………………………………$ 8,000 2013………………………………………(6,000) 2014……………………………………..(13,000) 2015…………………………………………11,000 2016………………………………………..15,000 a. What is th

> Dawn started her own rock band on January 2, 2015. She acquired all her equipment on January 2, 2015, and did not dispose of any of it before 2017. On April 15, 2017, the band’s amplifier, speakers, and other electronic equipment, are stolen after a co

> In 2017, Sondra Corporation recognizes $18,000 in Section 1231 gains and $10,000 in Section 1231 losses. In 2012, Sondra reported $12,000 in Section 1231 losses and no Section 1231 gains. No other Section 1231 gains or losses were recognized by Sondra

> Refer to the facts in problem 58. In the following year, FFF has these gains and losses: Casualty gain on building………………$ 5,000 Section 1231 gains…………………………$ 3,000 Section 1231 losses………………………..$ 17,000 What is the effect of these transactions on

> Fred's Foam Foundations (FFF) is a sole proprietorship that Fred started in 2012. Before the current year, FFF had not disposed of any property it owned. During the current year, FFF has the following gains and losses: Casualty Loss on foam truck …………

> Opal's neighbor, Jillian, persuades her to invest in Schaake Corporation, a new venture, on March 4, 2016. Opal pays $15,000 for 3,000 shares of common stock. On February 6, 2017, Schaake Corporation declares bankruptcy and closes its doors forever. O

> Dagwood has come to you with a pressing problem. In November 2006, he purchased an office building that he has rented out to various businesses. On May 2 of the current year, a fire swept through the building, totally destroying it. To make matters wo

> Rachel lives in a downtown apartment in Gotham City. She has 3 years remaining on her apartment lease when her landlord, Blaylock Company, approaches her about moving out. Blaylock wants to demolish the apartment building and build an office tower in i

> Ansel sells 400 shares of Sharpe, Inc., common stock on October 12, 2017 for $11,800 and pays $600 in commissions on the sale. He acquired the stock for $18,400 plus $800 in commissions on July 8, 2016. Ansel owns the following securities in December

> Marjorie is a software systems engineer for Hacker Corporation. In November 2014, she inherited two parcels of land in Brower Township from her grandfather. Her grandfather's estate valued the parcels, which are adjacent to each other and total 25 acre

> Dale’s son is a senior in high school and is planning to go away to college next year. Dale would like to buy a house near the campus and rent it to his son. He comes to you for advice on the tax ramifications of this arrangement. What advice can you

> Fingeland's Forest Choppers is a corporation engaged in the production of timber and lumber. Two years ago, Fingeland's reforested a clear-cut area by planting nursery-grown seedlings. Last year, a severe drought kills 80% of the seedlings, forcing Fin

> Kimberly is a developer of apartment complexes. Two years ago, she formed Deckside Apartments, a partnership, and initiates development of the Deckside Apartments complex. The Staten Investment Fund agrees to the development at an annual interest rate o

> Sterling is a college professor with an extensive stock portfolio. Last year, he met Wheeler, a stockbroker with the firm of Ransom, LaForge, and Adkins. To get Sterling's business, Wheeler offered to use his investment expertise on Sterling's behalf,

> Nina was getting ready to go to a party and couldn't find her bracelet. She remembered wearing it last weekend and taking it off at a bar to show to friends. Her memory of the remainder of that evening is foggy, but she hadn’t seen or worn the bracelet

> Mae and Vernon are equal owners of Denson, Inc., an S corporation. Denson owns 5,000 shares of stock in Cowboy Country. Denson paid $300,000 for the Cowboy Country stock, which is qualified small business stock. During the current year, Denson sells 4

> Lorissa owes Waterbury State Bank $200,000. During the current year, she is unable to make the required payments on the loan and negotiates the following terms to extinguish the debt. Lorissa transfers to Waterbury ownership of investment property with

> After Maria and Tatsuo are divorced, their 2 minor children continue to live with Maria. Pursuant to their divorce decree, Tatsuo pays Maria $1,000 per month in child support and $1,800 per month in alimony. The divorce decree specifies that in the eve

> Hawaii law requires the state to deposit a part of its annual pineapple income in the Hawaiian Long-lasting Fund. All income from the fund is deposited in the state's general fund. The fund's general manager is permitted to use the funds to buy only cert

> Neila sells 500 shares of Bolero Corporation stock for $10,500 and pays $500 in sales commissions on September 23 of the current year. She acquired the stock for $4,700 plus $300 in commissions five years ago. Neila owns the following securities in Dec

> Adrian is a salesperson who represents several wholesale companies. On January 2, 2017, she receives by mail a commission check from Ace Distributors in the amount of $10,000 and dated December 30, 2016. Adrian is concerned about the year in which the

> Gary is an internal auditor for Bodine Information Systems (BIF). In 2014, BIF opened a large production plant in Las Vegas, Nevada. Subsequently, Gary has had to spend several months each year at the Las Vegas facility. Gary has always fancied himsel

> Rick and Maria had been married for 20 years before their divorce in the current year. At that time, they made the usual property settlement: Maria got the house, the van and the cat; Rick got the mortgage, the Ford, and the dog. Other property was div

> Sam is an executive with a U.S. corporation. During the current year, he is working in another country. His employer provides a corporation-owned residence for Sam which is located three miles from his office. The residence is far above the standard h

> Henry invests $50,000 in an entity called Forward Investments on January 20, 2016. Under the terms of the investment agreement, the $50,000 is considered a loan that Forward will use to invest in derivative contracts. Henry is to receive 2% of the amou

> Omega Investments, Inc. was formed in 1999 by 10 unrelated individual investors. The corporation operates a chain of electronics stores. The corporation suffered losses in its early years but has become profitable in recent years. The corporation elect

> The Miller family has owned several large apartment buildings for many years. They organized Miller Properties, Inc., to own and manage the properties. The corporation is an accrual basis taxpayer and uses a calendar year. All shares of Miller Propert