Using the information in Table 1-3, determine the amount of average income tax liability per tax return, rounded to the nearest dollar, for each income range provided.
> What tax form is completed to elect deferral of gain on an involuntary conversion? a. No form is required. b. Form 4797. c. Form 4562. d. Form 1040, Schedule D.
> Gretel exchanges a warehouse with an adjusted basis of $150,000 and an FMV of $160,000 for a mini-storage building with an FMV of $100,000 and $60,000 cash. What are the recognized gain or loss and the basis of the mini-storage building? a. $0 gain and
> Jason exchanged land for another lot of land. The old land had an adjusted basis of $14,000, and the new land had an FMV of $22,000. Jason also paid $5,000 cash in the exchange. What are the recognized gain or loss and the basis of the land? a. $0 and
> Janel exchanges a building she uses in her rental business for a building owned by Russel that she will use in her rental business. The adjusted basis of Janel’s building is $160,000, and the FMV is $250,000. The adjusted basis of Russel’s building is $8
> Ava exchanges a land used in her business with Gail for another parcel of land. The basis of Ava’s old land is $50,000, the FMV is $66,000, and she gives Gail cash of $14,000. Gail’s basis in her land is $70,000, and the FMV is $80,000. What is Ava’s adj
> Terrance is age 71 and retired. Beginning in 2019, he must start taking minimum distributions from his IRA account that had a balance of $150,000 as of December 31, 2018. Make these three assumptions: His IRA will earn 8% per year, he will withdraw the m
> For the asset received in a like-kind exchange, how is the holding period of the new asset determined? a. According to the date the new asset is received. b. According to the date the old asset is given away. c. According to the holding period of the ol
> For an exchange to qualify as a nontaxable exchange, what criteria must be present? a. There must be an exchange. b. The property transferred and received must be real property held for use in a trade or business or for investment. c. The property excha
> Juanita, age 62, retired in 2019. During the year, she received distributions of $9,000 from her IRA. She made nondeductible contributions of $20,000 to the IRA in prior years and has never received a nontaxable distribution. As of December 31, 2019, the
> Mark, who is single, must start making distributions from his pension plan beginning April 1, 2019. At the end of 2018, when Mark was 71 years old, the plan had a balance of $220,000. He will use a single life expectancy. What amount must Mark take as a
> How does a change of duty station to a foreign location change the deduction of allowable moving expenses for a service member?
> Juan is single and retired on January 1, 2019, at age 62. He is entitled to receive monthly payments of $1,500 over his life from his employer’s qualified pension plan. The payments began January 1, 2019. He contributed $71,500 to the plan prior to his r
> Ellen is attending college less than half time. In the current year, she had education-related expenses of $8,000 for tuition and fees, $4,000 for room and board, $500 in transportation to and from her parent’s house, and $1,000 for required books. What
> Which of the following statements is true for a Qualified Tuition Plan (QTP)? a. Undergraduate or graduate students must be attending full time. b. Tax-free distributions are permitted of up to $10,000 per year for tuition and room and board at K–12 sch
> Vanessa and Martin file a joint return for 2019. They have one child, age 12. They have combined AGI of $202,000. What is their maximum permitted contribution to a Coverdell Education Savings Account for 2019? a. $0. b. $800. c. $1,200. d. $2,000.
> Without regard to AGI limitations, what is the maximum contribution permitted to a Coverdell Education Savings Account in 2019? a. $500. b. $2,000. c. $6,000. d. The lower of $6,000 or 100% of compensation.
> Jack is single and age 53. He reported AGI of $71,000 in 2019. He is an active participant in his employer’s pension plan. What is the maximum deductible IRA contribution he can make in 2019? a. $2,100. b. $4,900. c. $6,000. d. $7,000.
> Thomas is a self-employed plumber under the age of 50. His earnings from self-employment, before the Keogh deduction but after deducting half of the self-employment tax, are $80,000. What is his deductible Keogh contribution for 2019? a. $16,000. b. $19
> A participant in a 401(k) plan under the age of 50 may contribute up to what amount in 2019? a. $6,000. b. $13,000. c. $19,000. d. $56,000.
> Sanjay purchased a single life annuity contract for $200,000. The contract will pay $15,000 per year beginning in 2019 for the remainder of his life and has an expected return of $330,000. What amount of taxable income must Sanjay report in 2019? a. $5
> A participant in a Keogh plan over the age of 50 may contribute up to what amount in 2019? a. $7,000. b. $25,000. c. The lower of $56,000 or 25% of earned income from self-employment. d. The greater of $56,000 or 25% of earned income from self-employmen
> Rina, per orders of her military unit, moved from Seattle to Tampa and incurred $5,000 of unreimbursed moving expenses. What are the two criteria that are necessary for her to meet regarding her service in order to deduct these unreimbursed expenses?
> Carol works for ABC Company and earned $63,000 for the entire year 2019. 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. $43.4
> Adam received a bonus of $6,000 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 $5,000, is single, and claims one
> A taxpayer with 2019 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 2019 tax liability ratably over four quarterly payments. b. At lea
> On January 3, 2019, Jane employed a part-time household worker in her home. She paid the household worker $350 per month for 2019. 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.
> Dwayne is single with two dependents. He enrolled in a qualified health care plan through the Marketplace at a cost of $4,200 per year. His household income was $43,730. The SLCSP premium is $4,950. What is Dwayne’s premium tax credit? a. $0. b. $1,933.
> Employers pay a maximum federal unemployment tax of 6.0% on how much of an employee’s taxable wages for 2019? 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 2019? a. $1,800. b. $1,900. c. $2,000. d. $2,100.
> Thomas and Stephani are married with four qualifying children. Their earned income is $28,500. Calculate their EIC using the EIC formula. a. $4,563. b. $5,782. c. $6,002. d. $6,557.
> Juan and Lydia both work, file a joint return, and have one qualifying child. They have earned income of $19,000. What is their EIC? a. $529. b. $3,036. c. $3,526. d. $6,460.
> Abel and Loni adopted a boy (a U.S. citizen) during the current tax year and incurred a total of $15,675 in qualified adoption expenses. Abel and Loni have modified AGI of $225,000. What is the amount of adoption credit they can take? a. $9,208. b. $10,2
> Which form would a member of the military use to deduct qualifying moving expenses and what key pieces of information should be included there?
> After two and one-half years of working with the orphanage and the government, Jake and Nikki adopted a two-year-old girl from Korea. The adoption process, which became final in January 2019, incurred the following qualified adoption expenses. For how mu
> Vickie is single and age 43. She reported AGI of $126,000 in tax year 2019. She is an active participant in her employer’s pension plan. What is the maximum Roth IRA contribution she can make in 2019? a. $0. b. $1,600. c. $4,400. d. $6,000.
> Patrice is single and age 26. She reported AGI of $68,000 in tax year 2019. She is an active participant in her employer’s pension plan. What is the maximum deductible Roth IRA contribution she can make in 2019? a. $0. b. $2,400 c. $3,600. d. $6,000.
> Lauer Company started its business on July 25, 2019. On August 9 it paid wages for the first time and accumulated a tax liability of $48,000. On Friday, August 16, it incurred a tax liability of $52,000. How is Lauer Company treated as a depositor? a. M
> 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 2019. Ed worked part time and earned $1,200. What is the maximum deductible IRA contribution they can make in
> Terri is single and age 32. She reported AGI of $70,000 in tax year 2019. She is an active participant in her employer’s pension plan. What is the maximum deductible IRA contribution she can make in 2019? a. $6,000. b. $3,600. c. $2,400. d. $0.
> Erica earned $133,800 during 2019. How much will her employer withhold from her, in total, for FICA taxes? a. $9,842.90. b. $10,179.90. c. $10,222.65. d. $10,235.70.
> Dewoun has two jobs, and both employers withheld FICA tax. From his first job, he earned $104,110, and from his second job, he earned $30,300. How much can Dewoun claim as an additional payment on his Form 1040 as excess social security paid in 2019? a.
> Carlos earned a total of $236,000 for 2019. How much in FICA tax will his employer be required to withhold in his name? a. $11,448.30. b. $11,661.80. c. $11,706.80. d. $11,985.80
> Adenike has two jobs and earned $115,000 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. $9,945.00. b. $10,197.30. c. $10,327.50. d. $10,372.50.
> Sam owns all of the stock in a newly formed corporation. During 2019, the first year of operation, the corporation realized current earnings and profits of $10,000. Sam received a $12,000 distribution from the corporation. How much, if any, of the distri
> Darren paid the following expenses during November 2019 for his son Sean’s college expenses for the spring 2020 semester, which begins in January 2020: Tuition $ 12,000 Housing $ 8,000 Books $ 1,500 In addition, Sean’s uncle paid
> Marla is married, is paid $3,425 semimonthly, and claims four withholding allowances. What is the amount of federal income tax withheld on Marla’s gross wages for the semimonthly period? Use the percentage method table in the Appendix at the end of the c
> Ely is single, is paid $1,272 per week, and claims one allowance. What is the amount of federal income tax withheld on Ely’s gross wages for the week? Use the wage bracket table in the Appendix at the end of the chapter. a. $163. b. $165. c. $168. d. $1
> Employees claim withholding allowances on Form W-4. Each withholding allowance claimed lowers their annual withholding base by what amount for calendar year 2019? a. $4,050. b. $4,100. c. $4,150. d. $4,200
> Use the information in Table 1-3. If the federal tax system was changed to a proportional tax rate structure with a tax rate of 17%, calculate the amount of tax liability for 2017 for all taxpayers. How does this amount differ from the actual liability?
> Using the information in Table 1-3, determine the average amount of taxable income per tax return, rounded to the nearest dollar, for each of the ranges of taxable income provided.
> In 2019 Rosalva sold stock considered short-term for a gain of $1,240 and stock considered long-term for a loss of $2,143. She also had a $3,000 short-term loss carryover from 2018 and a $1,530 long-term loss carryover from 2018. a. What amount will be s
> Davidson Industries, a sole proprietorship, sold the following assets in 2019: a. The following questions relate to the sale of the warehouse: (1) What is the adjusted basis of the warehouse? (2) What is the realized gain on the warehouse? (3) What amou
> Ricardo acquired a warehouse for business purposes on August 30, 2000. The building cost $420,000. He took $227,600 of depreciation on the building and then sold it for $500,000 on July 1, 2019. What are the amount and nature of Ricardo’s gain or loss on
> Which of the following exchanges qualifies as like-kind property? a. Partnership interest for partnership interest. b. Inventory for equipment. c. Investment land for land used as a business parking lot. d. Business-use delivery truck for a business-use
> Antoine sold the following stock in 2019. ABC, Inc., is a § 1202 qualified small business (QSB). a. Complete this chart. b. After netting, what is the total gain or loss? c. If Antoine is in the 37% tax rate bracket, at what rat
> Respond to the following independent situations: a. Masa and Haiming, husband and wife, filing jointly, earn $275,000 in salaries and do not have any net investment income. (1) How much in surtax will Masa and Haiming be assessed on their Form 1040 for 2
> Respond to the following independent situations: a. Jacob is a single taxpayer who has net investment income consisting of $10,000 interest on a certificate of deposit, $5,000 from dividends from a mutual fund, $5,000 from capital gain distributions from
> Haneen has taxable income of $115,000 without consideration of capital gain or loss transactions. She has a short-term capital gain of $18,000, a long-term capital loss of $10,000, and a short-term capital gain of $4,000. Assume no gains or losses are fr
> Amna owns undeveloped land with an adjusted basis of $350,000. She sells the property to George for $405,000. a. What is Amna’s realized and recognized gain? b. To what IRC section does the gain on the property apply? c. If the land is used in a trade or
> Using the following independent situations, answer the following questions: Situation 1 Clara received from her Aunt Sona property with an FMV at the date of the gift of $40,000. Aunt Sona had purchased the property five years ago for $35,000. Clara sold
> Suzette inherited property from her father on April 19, 2019. The FMV at the date of death was $40,000. The property was worth $35,000 six months later and had a basis to her father of $25,000. a. What is the basis of the inherited property to Suzette? (
> During 2019 Roberto sold 830 shares of Casual Investor Mutual Fund for $8.875 per share. The shares were purchased on the following dates: Calculate the gain (loss) on the sale under the following assumptions (carry your calculations to three places): a
> Lois purchased the following blocks of Westgate stock: Lois sold 1,600 shares of the stock on November 20, 2019, for $5.00 per share for a total of $8,000. Using the first-in, first-out method, determine the gain or loss on the sale of the Westgate stoc
> Umair sold some equipment he used in his business on August 29, 2019, that was originally purchased for $65,000 on November 21, 2018. The equipment was depreciated using the 7-year MACRS method for a total of $17,249. Assume there is no additional nettin
> The Subchapter S status of a calendar-year corporation is statutorily terminated on August 12, 2019. The Subchapter S status is deemed to be terminated on what date? What is the answer if the status were voluntarily revoked on that date?
> In 2017, Jessica bought a new heavy truck for $45,000 to use 80% for her sole proprietor-ship. Total miles driven include 12,000 in 2017, 14,500 in 2018, and 13,000 in 2019. a. If Jessica uses the standard mileage method, how much may she deduct on her 2
> Brittany purchased a building for $500,000 on January 1, 2011. The purchase price does not include land. Calculate the cost recovery for 2011 and 2019 if the real property is a. Residential real property: b. A warehouse:
> On June 10, 2019, Huron purchased equipment (7-year class property) for $75,000. Determine Huron’s cost recovery deduction for computing 2019 taxable income. Assume that Huron does not make the § 179 and bonus elections.
> Michael is the sole proprietor of a small business. In June 2019, his business income is $12,000 before consideration of any § 179 deduction. He spends $245,000 on furniture and equipment in 2019. If Michael elects to take the § 179 deduction and no bonu
> Rueben acquires a warehouse on September 1, 2019, for $3 million. On March 1, 2023, he sells the warehouse. Determine Rueben’s cost recovery for 2019–2023:
> On February 4, 2019, Jackie purchased and placed in service a car she purchased for $21,500. The car was used exclusively for her business. Compute Jackie’s cost recovery deduction in 2019 assuming no § 179 expense but the bonus was taken:
> Janet purchased her personal residence in 2009 for $250,000. In January 2019, she converted it to rental property. The fair market value at the time of conversion was $210,000. a. Determine the amount of cost recovery that can be taken in 2019. b. Deter
> Betsy acquired a new network system on June 5, 2019 (5-year class property), for $75,000. She expects taxable income from the business will always be about $175,000 without regard to the § 179 election. Betsy will elect § 179 expensing. She also acquired
> Casper used the following assets in his Schedule C trade or business in the tax year 2019. Casper is a new client and unfortunately does not have a copy of his prior year’s tax return. He recalls that all of the assets purchased in pri
> In 2019, Landon has self-employment earnings of $195,000. Compute Landon’s self-employment tax liability and the allowable income tax deduction of the self-employment tax paid. SE tax: SE deduction:
> A calendar-year corporation properly files a Subchapter S election on January 10, 2019. On what date is the election effective? What if the election were filed on June 1, 2019?
> Eric, who is single, has income from his Schedule C of $150,000. His taxable income is $120,000 after his other deductions. What is Eric’s QBI deduction for 2019?
> Jose purchased a vehicle for business and personal use. In 2019, he used the vehicle 18,000 miles (80% of total) for business and calculated his vehicle expenses using the standard mileage rate (mileage was incurred ratably throughout the year). He paid
> In 2017, Gerald loaned Main Street Bakery $55,000. In 2018, he learned that he would probably receive only $6,400 of the loan. In 2019, Gerald received $3,000 in final settlement of the loan. Calculate Gerald’s possible deductions with respect to the loa
> In 2019 Arturo’s pleasure boat that he purchased in 2013 for $48,500 was destroyed by a hurricane in a part of Florida that was declared a federal disaster area. His loss was not totally covered by his insurance. On what form(s) will Arturo report this l
> Jaylen made a charitable contribution to his church in the current year. He donated common stock valued at $33,000 (acquired as an investment in 2005 for $13,000). Jaylen’s AGI in the current year is $75,000. What is his allowable charitable contribution
> Tyrone and Akira, who are married, incurred and paid the following amounts of interest during 2019: Home acquisition debt interest ……………………………... $15,000 Credit card interest …………………………………………………. 5,000 Home equity loan interest …………………………………………………. (used
> In 2018, Tomas, a single taxpayer, had $3,750 in state tax withheld from his paycheck. He properly deducted that amount on his 2018 tax return as an itemized deduction that he qualified for, thus reducing his tax liability. After filing his 2018 tax retu
> LMNO Corporation was formed in 2011. It reported net income (loss) over the 2011 through 2017 tax years, before accounting for any net operating losses, as follows: 2011……………………….$ (4,000) 2012……………………….19,000 2013……………………….23,000 2014………………………. (31,000
> Determine taxable income in each of the following independent cases. In all cases, the company was very profitable in all years prior to 2017 and it had retained earnings of $1,000,000 at the end of 2017. a. In 2018, Company A has taxable income of $60,
> Calvin purchased a 40% partnership interest for $43,000 in February 2017. His share of partnership income in 2017 was $22,000, in 2018 was $25,000, and in 2019 was $12,000. He made no additional contributions to or withdrawals from the partnership. On De
> Alcott invested $20,000 for a 25% interest in a partnership (not a passive activity) on January 1, 2019. The partnership borrowed $100,000 (with full recourse to the partners) on January 15, 2019, to cover short-term cash flow requirements. During the ye
> Zach contributed land with an FMV of $25,000 and a basis of $14,000 to a partnership on April 5, 2013. On June 6, 2019, the partnership distributed the land to Art, a partner in the same partnership. At distribution, the land had an FMV of $29,000. a. W
> Kerry is a partner in the Kerry, Davis, Smith & Jones Partnership. Kerry owned 25% from January 1, 2019, to June 30, 2019, when he bought Jones’s 25% interest. He owned 50% or the rest of the year. The partnership had ordinary income of $146,000 and $15,
> Barbara is single and owns a home in the city, which is her primary residence. She also owns a cottage at the beach, which she treats as a vacation home. In April 2019, she borrowed $50,000 on a home equity loan and used the proceeds to pay off credit ca
> Arnold exercised an incentive stock option in 2016, acquiring 1,500 shares of stock at an option price of $80 per share. The FMV of the stock at the date of exercise was $110 per share. In 2018, the rights became freely transferable and were not subject
> Herbie is the owner of two apartment buildings. Following is information related to the two buildings: Herbie elected the maximum depreciation available for each asset. What is the effect of depreciation on AMTI for 2019?
> William is not married, nor does he have any dependents. He does not itemize deductions. His taxable income for 2019 was $87,000 and his regular tax was $15,061. His AMT adjustments totaled $125,000. What is William’s AMT for 2019?
> William is not married, nor does he have any dependents. He does not itemize deductions. His taxable income for 2019 was $87,000 and his regular tax was $15,061. His AMT adjustments totaled $125,000. What is William’s AMT for 2019?
> Carson had the following itemized deductions in 2019: State income taxes………………..………………..………………..$ 1,500 Charitable contributions………………..………………..…………..9,900 Mortgage interest (personal residence) ………………..……….12,000 Medical expenses ($9,875 − [10.0% × $75,
> Virginia is an accountant for a global CPA firm. She is being temporarily transferred from the Raleigh, North Carolina, office to Tokyo. She will leave Raleigh on October 7, 2019, and will be out of the country for four years. She sells her personal resi
> Pedro sells investment land on September 1, 2019. Information pertaining to the sale follows: Adjusted basis $25,000 Selling price 90,000 Selling expenses 1,500 Down payment 12,000 Four installment payments 15,000 Mortgage assum
> Myer owns a 20% interest in a partnership (not involved in real estate) in which his at-risk amount was $50,000 at the beginning of the year. During the year, he receives a $40,000 distribution from the partnership. The partnership produces a $160,000 lo
> Jessica’s office building is destroyed by fire on November 15, 2019. The adjusted basis of the building is $410,000. She receives insurance proceeds of $550,000 on December 12, 2019. a. Calculate her realized and recognized gain or loss for the replacem
> Lewis owns 200 shares of stock in Modlin Corporation. His adjusted basis for the stock is $180,000. On December 15, 2019, he sells the stock for $170,000. He purchases 200 shares of Modlin Corporation stock on January 8, 2020 for $170,000. a. What are
