1. (TCO 9) Trent files his tax return 35 days after the due date. Along with the return, Trent remits a check for $8,000, which is the balance of the tax owed.
Disregarding the interest element, Trent's total failure to file and to pay penalties are:
2. (TCO 9) A characteristic of fraud penalties is:
3. (TCO 1) Federal tax legislation generally originates in what body?
4. (TCO 1) In § 212(1), the number (1) stands for the:
5. (TCO 11) Kyle, whose wife died in December 2009, filed a joint tax return for 2009. He did NOT remarry, but has continued to maintain his home in which his two dependent children live. What is Kyle's filing status regarding 2012?
6. (TCO 11) Wilma is married to Herb, who abandoned her in 2009. She has NOT seen or communicated with him since June of that year. She maintains a household in which she and her two dependent children live. Which of the following statements about Wilma's filing status in 2012 is correct?
7. (TCO 7) Home Office, Inc. leased a copying machine to a new customer on December 27, 2012. The machine was to rent for $500 per month for a period of 36 months beginning January 1, 2013. The customer was required to pay the first and last month's rent at the time the lease was signed. The customer also was required to pay an $800 damage deposit. Home Office must recognize as income for the lease:
8. (TCO 7) With respect to income from services, which of the following is true?
9. (TCO 3) Ridge is the manager of a motel. As a condition of his employment, Ridge is required to live in a room on the premises so that he would be there in case of emergencies. Ridge considered this a fringe benefit, since he would otherwise be required to pay $600 per month for rent. The room that Ridge occupied normally rented for $60 per night, or $1,500 per month. On the average, 90% of the motel rooms were occupied. As a result of this rent-free use of a room, Ridge is required to include in gross income:
10. (TCO 3) Adam repairs power lines for the Egret Utilities Company. He is generally working on a power line during the lunch hour. He must eat when and where he can and still get his work done. He usually purchases something at a convenience store and eats in his truck. Egret reimburses Adam for the cost of his meals.
11. (TCO 10) Hans purchased a new passenger automobile on August 17, 2012 for $40,000. During the year, the car was used 40% for business and 60% for personal use. Determine his cost recovery deduction for the car for 2012.
12. (TCO 10) Bob and April own a house at the beach. The house was rented to unrelated parties for 8 weeks during the year. April and the children used the house 12 days for their vacation during the year. After properly dividing the expenses between rental and personal use, it was determined that a loss was incurred as follows:
Gross rental income
Less: Mortgage interest and property taxes
Other allocated expenses
Net rental loss
What is the correct treatment of the rental income and expenses on Bob and April's joint income tax return for the current year, assuming the IRS approach is used, if applicable?
13. (TCO 10) On May 2, 2012, Karen places in service a new sports utility vehicle that costs $70,000 and has a gross vehicle weight of 6,300 lbs. The vehicle is used 40% for business and 60% for personal use. Determine the cost recovery deduction for 2012.
14. (TCO 10) Which of the following must be capitalized by a business?