Loudoun Campus Acct 307 Midterm Examination
ApproximateProblem Matter Factors Minutes A - I A number of Selection 90 75A-II Matching 10 10Whole 100Checking Work 590Downside A - I — A number of Selection (30 x three = 90 factors)Selected the very best reply.1. Which, if any, of the next is a typical attribute of an advert valorem tax?a. Taxpayer compliance is larger for private property than for actual property.b. The tax on vehicles 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 . Which of the next just isn't 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. In 2012, Jamie had the next transactions:Wage $ 50,000Capital loss from a inventory funding (5,000)Alimony funds (7,000)Acquired compensation of an interest-free mortgage he made to his brother in 2010 20,000Residence mortgage curiosity expense on private residence eight,000Jamie'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 Throughout 2012, they furnish greater than half of the help of their 20-year outdated daughter, Ashley, who's a full-time faculty pupil. 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 all the 12 months. 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.5. Kyle and Chloe, ages 55 and 54, respectively, file a joint tax return for 2012. They supplied all the help for his or her 32-year-old son, who had $three,900 of gross earnings. Their 23-year-old daughter, a full-time pupil till her commencement on June 14, 2012, earned $7,000, which was 35% of her complete help throughout 2012. Her mother and father supplied the remaining help. Kyle and Chloe additionally supplied complete help for Chloe's father who's a citizen and life-long resident of Canada. What number of private and dependency exemptions can Kyle and Chloe declare on their 2012 earnings tax return?a. 5.b. 4.c. Three.d. Two.e. Not one of the above.6. For the qualifying relative rule:a. A dependent should reside with the taxpayer.b. A dependent should fulfill an age requirement.c. A dependent have to be associated to the taxpayer.d. A dependent could also be a citizen or resident of Canada.e. Not one of the above.7. Tommy is within the 35% tax bracket. Throughout 2012, he had the next capital asset transactions:Acquire from the sale of an artwork assortment (held for two years) $20,000Acquire from the sale of an funding in inventory(held for two years) 30,000Acquire from the sale of a land funding (held for 11 months) 6,000Tommy's tax penalties from these positive factors are as follows:a. (15% X $20,000) + (28% X $30,000) + (35% X $6,000).b. (15% X $30,000) + (35% X $26,000).c. (28% X $20,000) + (15% X $30,000) + (35% X $6,000).d. (15% X $50,000) + (35% X $6,000).e. Not one of the above.eight. Paul Bunyon, Inc.., an accrual foundation taxpayer, leased a wooden shredding machine to a brand new buyer on December 27, 2012. The machine was to hire for $400 per thirty days for a interval of 12 months starting January 1, 2013. The client was required to pay the primary and final month's hire on the time the lease was signed. The client additionally was required to pay a $400 harm deposit. Paul Bunyon should acknowledge as earnings from the lease in 2012:a. $Zero.b. $400.c. $800.d. $1,200.e. Not one of the above.9. As a normal rule:a. Earnings from funding property is at all times taxed to the one who receives the earnings.b. Earnings from a CD is taxed to the one who collects the earnings.c. The recipient of earnings from companies should pay the tax on the earnings.d. Earnings from companies is taxed to the one who gives the companies.e. Not one of the above.10. Alicia operates a gymnasium. She sells memberships that entitle the member to make use of the services at any time. A one-year membership prices $300 ($300/12 = $25 per thirty days); a two-year membership prices $360($360/24 = $15 per thirty days). Money cost is required initially of the membership. On July 1, 2012, Alicia offered a one-year membership and a two-year membership.a. If Alicia is an accrual foundation taxpayer, her gross earnings from the contracts for 2012 is $660 ($360 + $300).b. If Alicia is an accrual foundation taxpayer, her gross earnings from the contracts for 2012 is $510 ($150 + $360).c. If Alicia is an accrual foundation taxpayer, her gross earnings from the contracts for 2012 is $240 ($150 + $90).d. If Alicia is an accrual foundation taxpayer, her gross earnings from the contracts for 2012 is $390 ($300 + $90).e. Not one of the above.11. Below the phrases of a divorce settlement, Manny is to pay his spouse Bailey $2,000 per thirty days. The funds are to be diminished to $800 per thirty days when their 12 year-old little one reaches age 18. Throughout the present 12 months, Manny paid $24,000 underneath the settlement. Assuming all the different situations for alimony are happy, Manny can deduct from gross earnings (and Bailey should embody 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, acquired the $250,000 proceeds from the group-term life insurance coverage coverage.a. Walnut Firm should embody $four,800,000 ($5,000,000 - $200,000) in gross earnings and Christy should embody $250,000 in gross earnings.b. Walnut Firm can exclude $four,800,000 ($5,000,000 - $200,000) from gross earnings, however Christy should embody $250,000 in gross earnings.c. Christy can exclude the life insurance coverage proceeds of $250,000, however Walnut Firm should embody $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 acquired $250,000 for his bodily harm, $40,000 for his lack of earnings, and $200,000 punitive damages. Because of the award, the quantity Antonio should embody 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 pupil at Sierra College and a candidate for a bachelor's diploma. Throughout 2012, he acquired the next funds:Wages $9,000State scholarship for ten months - tuition and books eight,000- room and board 6,000Mortgage from faculty monetary help 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 12 months money foundation taxpayer, has the next transactions:Wage from job $60,000IRA contribution 5,000Scholar 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 offered 300,000Lease 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 12 months), 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 picket bowls in her spare time. Throughout the 12 months she offered 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 12 months money foundation taxpayer, owns and operates a number of quick meals eating places in Georgia, and needs to increase to different states. Throughout 2012, she spends $25,000 to analyze a number of eating places in Alabama and $27,000 to analyze recent meals markets in Georgia. She acquires the Alabama operations, however not the recent meals markets in Georgia. As to those bills, Anne ought to:a. Expense $25,000 and never deduct $27,000 associated to the recent 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 count on to obtain 40 cents on the greenback. In March 2012, closing settlement was made, and Galaxy acquired $5,000. Galaxy's coverage is to deduct losses as quickly as permitted. How a lot loss can Galaxy deduct and by which 12 months?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 offered the inventory for $15,000. How ought to Nova deal with the loss on the sale of the inventory?a. $60,000 strange loss.b. $60,000 short-term capital loss.c. $60,000 long-term capital loss.d. $50,000 strange 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 residence was partially destroyed by a hearth. 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 acquired 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 pupil loans.b. Shifting bills.c. Contribution to a standard Particular person Retirement Account.d. One-half of self-employment tax.e. All the above.28. Antonio was injured in an vehicle accident and acquired $250,000 for his bodily harm, $40,000 for his lack of earnings, and $200,000 punitive damages. Because of the award, the quantity Antonio should embody 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 charge than the gross sales tax charge.b. By only some states.c. To stop the avoidance of the gross sales tax.d. By the Federal authorities.e. Not one of the above.30. In January, Donna offered 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 offered the identical inventory by 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.Downside A - II — Matching (12 x 1 = 12 factors). Two factors credit score (in case of 100%) shall be utilized to lacking factors.Match the statements that relate to one another. Observe: Some decisions 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 underpaymentd. 5% per thirty days (25% restrict)e. Zero.5% per thirty days (25% restrict)f. Carried out at IRS officeg. Carried out at taxpayer’s officeh. 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 penalty4. 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