I have 20 questions to be answer: 11. Assume the same facts as in the previous question (again, ignore any deduction that may relate to self-employment taxes). Markus's Taxable Income for 2014 is: a. $92,000 b. $88,000 c. $73,050 d. $72,000 12. Lisa and Luis are married taxpayers who file a joint return. In 2012, they had AGI of $550,000 and their preliminary itemized deductions totaled $40,000. In 2014, they will also have AGI of $550,000 and preliminary itemized deductions of $40,000. In 2012 and 2014 their itemized deductions include mortgage interest. Which of the following is TRUE? a. When comparing their 2012 and 2014 returns, they will deduct more itemized deductions on their 2012 return b. When comparing their 2012 and 2014 returns, they will deduct more itemized deductions on their 2014 return c. When comparing their 2012 and 2014 returns, they will deduct the same amount of itemized deductions on each return d. They will not deduct any itemized deductions on either their 2012 return or their 2014 return 13. Which of the following statements is TRUE? a. The U.S. government always "breaks-even" with regards to alimony payments (i.e., because the reduction in taxes for the spouse paying the alimony will always equal the increase in taxes for the spouse receiving the alimony) b. A dependent's earned income amount could never impact the size/amount of his/her standard deduction amount c. Taxpayers often prefer deductions FOR AGI to deductions FROM AGI d. The amount of tax-exempt interest received by a taxpayer could never impact the amount of his/her Social Security benefits that are subject to taxation 14. Assume that Jamar received some unique payments in 2014. Which of the following items may Jamar exclude from gross income? a. $15,000 received as a gift from a relative b. $57,000 of punitive damages received from a lawsuit against Dangerous Co. c. $2,000 received from Fantasy Football league winnings d. None of the above 15. In early 2014, Lisbec received a gift of a home valued at $500,000 (from Lisbec's Uncle, Felix). Felix also gave Lisbec a $10,000 cash gift. During 2014, Lisbec rented the home to Peter. As a result of the lease with Peter, Lisbec earned net rental income of $24,000 (for 2014). What amount of income should Lisbec's 2014 tax return include from these transactions? a. $534,000 b. $34,000 c. $24,000 d. $0 16. CONSIDER THE impact of the Tax Increase Prevention Act we discussed in Chat. In 2014, Andrew, a calendar-year taxpayer, purchased business equipment (5-year property) for $175,000. The property was placed in service in January 2014 (and is being used exclusively in Andrew's extremely profitable business). No other personal property is purchased by Andrew in 2014. What is the most that Andrew may deduct in 2014 under Section 179 of the Code (ignore any potential deductions resulting from bonus deprecation or MACRS)? a. $2,000,000 b. $175,000 c. $15,000 d. $0 17. CONSIDER THE Tax Increase Prevention Act we discussed in Chat and assume the same facts as in the previous question. However, for this question, assume that Andrew purchased the business equipment for $2,200,000 (instead of $175,000). What is the most that may be deducted in 2014 under Section 179 of the Code (ignore any potential deductions resulting from bonus deprecation or MACRS)? a. $2,000,000 b. $500,000 c. $300,000 d. $0 18. Which of the following is most likely deductible FOR AGI (i.e., PRE-AGI)? a. Amounts paid for state income taxes b. Amounts paid for interest on a student loan c. Amounts paid for an employee's unreimbursed travel expenses (i.e., the travel was related to taxpayer's fulltime position at a large corporation) d. Each of the above items would be deducted FROM AGI (i.e., POST-AGI) 19. Niosha has AGI of $100,000 in 2014. During 2014, Niosha also had an uninsured personal casualty loss of $15,000 (after the $100 reduction). The personal casualty loss related to an accident that Niosha had with Rose. Niosha carried no collision insurance and Rose was also an uninsured motorist. Assume Niosha itemizes deductions in 2014. What is the casualty loss amount that Niosha may actually deduct? a. $15,000 b. $10,000 c. $5,000 d. $0 20. Refer to the facts in the previous question. However, for purposes of this question assume that Niosha takes the standard deduction in 2014. What is the casualty loss amount that Niosha may deduct? a. $15,000 b. $10,000 c. $5,000 d. $0 21. If Jessica is insolvent with assets of $20,000 and liabilities of $30,000 and one of Jessica's creditors then cancels a debt of $15,000, what amount must Jessica recognize as income? a. $15,000 b. $10,000 c. $5,000 d. $0 22. TXX5761 Inc. paid all of the premiums for a $650,000 group-term life insurance policy on its 68-year-old President, Kayanna. Assume that pursuant to the applicable table, the cost per $1,000 of protection for a 1-month period is $1.27 (for a person aged 65 to 69). What amount relating to the policy (if any) must be included in Kayanna's Gross Income for the year (assume Kayanna was covered for all twelve months)? a. $650,000 b. $600,000 c. $9,144 d. $0 23. On January 1, 2014, Yandra purchased a 20-year annuity for $80,000 from MARIA MUTUAL (an established insurance company). Under the annuity, Yandra will receive payments of $740 for each month of annuity's life. What amount of the annuity payments may be excluded from Yandra's Gross Income for 2014 (assume all 12 monthly payments are made in 2014)? a. $0 b. $4,000 c. $4,880 d. $8,880 24. Assuming the same facts as in the previous problem, what amount of the annuity payments from MARIA MUTUAL must be included in Yandra's Gross Income for 2014? a. $0 b. $4,000 c. $4,880 d. $8,880 25. In March 2014, Frank, a calendar-year taxpayer, purchased new 7-year property for $800,000. The property was immediately placed into service (and is still being used exclusively in Frank's extremely profitable business). No other personal property was purchased by Frank in 2014. Compute the largest tax deduction possible in 2014 for the equipment (Consider the Section 179 election, Bonus Depreciation, and MACRS, if applicable. Also, consider the Tax Increase Prevention Act we discussed in Chat): a. $800,000 b. $671,435 c. $500,000 d. $0 26. During 2014, 5-year MACRS property was placed in service by Natasha, a calendar-year taxpayer. Assume that Natasha does NOT make a Section 179 election. The property will most likely be depreciated over: a. Six calendar years b. Five calendar years c. Two and one-half calendar years d. One calendar year 27. Tana is a cash-basis taxpayer. Which doctrine will most likely limit Lydia's ability to choose the year in which to recognize income? a. The economic benefit doctrine b. The constructive receipt doctrine c. The fruit-of-the-tree doctrine d. None of the above 28. Flo contributed some inventory from Flo's sole proprietorship to a public charity for its use. On the date of the contribution, Flo's basis in the inventory was $13,000 and the fair market value was $20,000. What is the amount of charitable contribution allowed (before considering any potential percentage limitation)? a. $0 b. $7,000 c. $13,000 d. $20,000 29. Which of the following items most resembles an interest free loan from the U.S. government? a. Deductions under Section 179 b. Student loan interest being deducted c. Travel expenses being deducted d. Unreimbursed employee business expenses being deducted 30. Which of the following statements is TRUE about Jamar's hobby activity? a. A loss from Jamar's hobby activity may be used to offset his dividend income b. When compared to Jamar's business, Jamar's hobby activity is subject to exactly the same tax laws c. Expenses relating to Jamar's hobby activity may NEVER be deductible d. A loss from Jamar's hobby activity cannot be used to offset wages from his full-time employment
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