ACCT 307 Midterm Examination
1. Which, if any, of the next is a typical attribute of an advert valorem tax?a. Taxpayer compliance is bigger for private property than for actual property.b. The tax on cars at all times considers the load of the automobile.c. Most states impose a tax on actual property.d. A tax on intangible property is widespread in most states.e. Not one of the above.2. 2 . Which of the next is just not a attribute of the statute of limitations?a. A unique statute of limitation applies to tax refunds and deficiencies.b. A six-year statute of limitations applies if earnings is simple by greater than 25%.c. There's a six-year statute of limitations on assessments of tax if a return has by no means been filed.d. The three-year statute of limitations applies to well timed filed tax returns reporting considerably correct quantities of earnings and deductions.e. Not one of the above.three. three. In 2012, Jamie had the next transactions:Wage $ 50,000Capital loss from a inventory funding (5,000)Alimony funds (7,000)Obtained reimbursement of an interest-free mortgage he made to his brother in 2010 20,000House mortgage curiosity expense on private residence eight,000 Jamie's AGI is:a. $32,000.b. $40,000.c. $49,000.d. $52,000.e. Not one of the above.four. Herald and Shantelle are married and underneath 65 years of age. Throughout 2012, they furnish greater than half of the help of their 20-year previous daughter, Ashley, who's a full-time school scholar. Ashley earns $eight,500 from her job, most of which she makes use of to pay for school. Herald and Shantelle additionally present greater than half of the help of Herald's cousin who lives with them for the whole yr. Shantelle's father, who died on June 10, 2012, at age 70, has for a few years certified as their dependent. What number of private and dependency exemptions ought to Herald and Shantelle declare?a. Two.b. Three.c. 4.d. 5.e. Not one of the above.11. Beneath the phrases of a divorce settlement, Manny is to pay his spouse Bailey $2,000 per 30 days. The funds are to be diminished to $800 per 30 days when their 12 year-old little one reaches age 18. Through the present yr, Manny paid $24,000 underneath the settlement. Assuming all the different situations for alimony are glad, Manny can deduct from gross earnings (and Bailey should embrace in gross earnings) as alimony:a. $-Zero-.b. $9,600.c. $14,400.d. $24,000.e. Not one of the above.12. Kenneth. After the corporate had paid $200,000 in premiums, Kenneth died and the corporate collected the $5 million face quantity of the coverage. The corporate additionally bought group-term life insurance coverage on all its workers. Kenneth's widow, Christy, obtained the $250,000 proceeds from the group-term life insurance coverage coverage.a. Walnut Firm should embrace $four,800,000 ($5,000,000 - $200,000) in gross earnings and Christy should embrace $250,000 in gross earnings.b. Walnut Firm can exclude $four,800,000 ($5,000,000 - $200,000) from gross earnings, however Christy should embrace $250,000 in gross earnings.c. Christy can exclude the life insurance coverage proceeds of $250,000, however Walnut Firm should embrace $four,800,000 ($5,000,000 - $200,000) in gross earnings.d. Walnut Firm and Christy can exclude the life insurance coverage proceeds of $5,000,000 and $250,000 respectively from gross earnings.e. Not one of the above.13. In December 2012, Carl died. His spouse was the beneficiary of his $500,000 life insurance coverage coverage. Carl had paid $25,000 in premiums. His spouse elected to gather the proceeds in ten equal installments of $55,000 ($50,000 on the face quantity of the coverage and $5,000 curiosity). Of the $55,000 she collected in 2012, the nontaxable quantity is:a. $Zero.b. $5,000.c. $50,000.d. $55,000.e. Not one of the above.14. Antonio was injured in an vehicle accident and obtained $250,000 for his bodily damage, $40,000 for his lack of earnings, and $200,000 punitive damages. On account of the award, the quantity Antonio should embrace in gross earnings is:a. $40,000.b. $200,000.c. $240,000.d. $490,000.e. Not one of the above.15. Charles, age 19, is a full-time scholar at Sierra College and a candidate for a bachelor's diploma. Throughout 2012, he obtained the next funds: Wages $9,000State scholarship for ten months - tuition and books eight,000- room and board 6,000Mortgage from school monetary assist workplace 2,750Present from mother and father three,500Money dividends 2,500Money prize awarded in a contest 1,250$33,000What's Charles's adjusted gross earnings for 2012?a. $9,500.b. $10,750.c. $17,500.d. $18,750.e. Not one of the above.16. Which of the next is a deduction from AGI?a. Commerce or enterprise bills.b. Losses on the sale of property.c. Reimbursed worker enterprise bills.d. Funding-related bills attributable to the manufacturing of funding earnings.e. Not one of the above.17. George, a calendar yr money foundation taxpayer, has the next transactions:Wage from job $60,000IRA contribution 5,000Pupil mortgage curiosity 1,500Shifting bills three,500Primarily based on this data, George has:a. AGI of $50,000.b. AGI of $56,500.c. AGI of $58,500.d. AGI of $60,000.e. Not one of the above.19. Anthony is single, underneath age 65, and has gross earnings of $70,000. His bona fide deductible bills are as follows: Alimony paid $eight,000Charitable contributions 5,000Contribution to a standard IRA 5,000Bills paid on rental property three,000Curiosity and taxes on private residence 9,000State earnings tax 1,200What's Anthony's AGI?a. $38,800.b. $49,000.c. $54,000.d. $57,000.e. $62,000.20. James operates an unlawful playing operation and incurred the next bills:Salaries $200,000Unlawful kickbacks 32,000Bribes to frame guards 44,000Price of products bought 300,000Hire 12,000Curiosity 18,000Which of the above quantities reduces his taxable earnings?a. $300,000.b. $530,000.c. $562,000.d. $606,000.e. Not one of the above.21. If a trip house is used primarily for private use (rented for lower than 15 days per yr), which of the next is true?a. No bills associated to the house are allowed as a deduction.b. All rental earnings is excluded from AGI.c. All bills are deductible from AGI.d. Bills have to be allotted between rental and private use.e. Not one of the above.22. Lizzie pursued a interest of constructing wood bowls in her spare time. Through the yr she bought the bowls for $ 11,500. She incurred bills as follows: Provides $eight,200Curiosity on mortgage to get enterprise began 2,850Promoting 575Assuming that the exercise is deemed a interest and Lizzie takes the usual deduction, how ought to she report this stuff on her tax return?a. Embrace $11,500 in earnings and deduct $11,500 for AGI.b. Ignore each earnings and bills since interest losses are disallowed.c. Embrace $11,500 in earnings and deduct not one of the bills since interest bills have to be itemized.d. Embrace $11,500 in earnings and deduct curiosity of $2,850 for AGI.e. Not one of the above.23. Anne, a calendar yr money foundation taxpayer, owns and operates a number of quick meals eating places in Georgia, and needs to develop to different states. Throughout 2012, she spends $25,000 to research a number of eating places in Alabama and $27,000 to research contemporary meals markets in Georgia. She acquires the Alabama operations, however not the contemporary meals markets in Georgia. As to those bills, Anne ought to:a. Expense $25,000 and never deduct $27,000 associated to the contemporary meals markets.b. Expense $27,000 for 2012.c. Expense $three,000 for 2012 and capitalize $49,000 and amortize.d. Expense $52,000.e. Not one of the above.24. On Might 1, 2010, Galaxy Mortgage Firm loaned Victor $50,000. In 2011, Victor filed for chapter. At the moment, it was revealed that Victor's collectors may anticipate to obtain 40 cents on the greenback. In March 2012, remaining settlement was made, and Galaxy obtained $5,000. Galaxy's coverage is to deduct losses as quickly as permitted. How a lot loss can Galaxy deduct and by which yr?a. 2010-$45,000.b. 2011-zero; 2012-$45,000.c. 2011-$30,000; 2012-$15,000.d. 2011-$20,000; 2012-$25,000.e. Not one of the above.25. On January 10, 2011, Nova Company bought inventory in Universe Company (the inventory is § 1244 small enterprise inventory) for $75,000. On October 15, 2012, Nova bought the inventory for $15,000. How ought to Nova deal with the loss on the sale of the inventory?a. $60,000 extraordinary loss.b. $60,000 short-term capital loss.c. $60,000 long-term capital loss.d. $50,000 extraordinary loss and $10,000 long-term capital loss.e. Not one of the above.26. Willard had adjusted gross earnings of $75,000. Throughout 2012, his private use summer season house was partially destroyed by a fireplace. Pertinent information with respect to the house follows: Price foundation $175,000Worth earlier than casualty $265,000Worth after casualty $185,000Willard was insured for 60% of his precise loss and he obtained the insurance coverage settlement. What's Willard's allowable casualty loss deduction?a. $80,000.b. $32,000.c. $24,500.d. $24,400.e. $Zero.27. Which, if any, of the next is a deduction for AGI?a. Curiosity on scholar loans.b. Shifting bills.c. Contribution to a standard Particular person Retirement Account.d. One-half of self-employment tax.e. The entire above.28. Antonio was injured in an vehicle accident and obtained $250,000 for his bodily damage, $40,000 for his lack of earnings, and $200,000 punitive damages. On account of the award, the quantity Antonio should embrace in gross earnings is:a. $40,000.b. $200,000.c. $240,000.d. $490,000.e. Not one of the above.29. A use tax is imposed:a. At the next price than the gross sales tax price.b. By only some states.c. To forestall the avoidance of the gross sales tax.d. By the Federal authorities.e. Not one of the above.30. In January, Donna bought inventory with a value foundation of $50,000 to her brother, Lamar, for $40,000, the truthful market worth of the inventory on the date of sale. 5 months later, Lamar bought the identical inventory by means of his dealer for $55,000. What's the tax impact of those transactions?a. Disallowed loss to Donna of $10,000; acknowledged acquire to Lamar of $15,000.b. Deductible loss to Donna of $10,000; acknowledged acquire to Lamar of $15,000.c. Disallowed loss to Donna of $10,000; acknowledged acquire to Lamar of $5,000.d. Disallowed loss to Lamar of $10,000; acknowledged acquire to Donna of $5,000.e. Not one of the above.Drawback A - II — Matching (12 x 1 = 12 factors). Two factors credit score (in case of 100%) might be utilized to lacking factors.Match the statements that relate to one another. Notice: Some selections could also be used greater than as soon as.a. three years from due date of returnb. three years from date return is filedc. 20% of underpayment d. 5% per 30 days (25% restrict)e. Zero.5% per 30 days (25% restrict)f. Carried out at IRS workplace g. Carried out at taxpayer’s workplace h. 6 yearsi. 45-day grace interval allowed to IRSj. No statute of limitations (interval stays open).ok. No right match provided1. Workplace audit2. Area audit3. Failure to file penalty four. Failure to pay penalty5. Negligence penalty6. Civil fraud penalty7. Fraud and statute of limitations8. Early submitting and statute of limitations (deficiency conditions)9. Late submitting and statute limitations (deficiency conditions)10. No return and statute limitations11. Greater than 25% gross earnings omission and statute of limitations12. Curiosity due on refund