1. (TCO E) Interest, dividends, and annuities income are classified as _____. (Points : 5)
2. (TCO D) Tom Tanner traded in a printing press with an adjusted basis of $20,000 for a smaller press valued at $12,000. In addition to the smaller press, Tom received $3,000 in cash and was relieved of the existing liability of $5,000 on the old press. What is Tom's recognized gain? (Points : 5)
3. (TCO H) Bob and Susan file a joint return for the 2010 tax year. Their adjusted gross income is $80,000. They had a net investment income of $9,000. In 2010, they had the following interest expenses.
Personal credit card interest: $5,000
Home mortgage interest: $10,000
Investment interest (on loans used to buy stocks): $10,000
What is the interest deduction for Bob and Susan for the 2010 tax year? (Points : 5)
4. (TCO B) Bob and Cindy Smith paid the following medical expenses during the year (all in excess of reimbursement).
Hospital and doctor bills: $800
Medicine and drugs: $700
Hospitalization insurance premiums: $6,000
Medicine and drugs (for dependent mother, age 71): $1,000
Assuming that the Smiths' adjusted gross income was $60,000, how much of a medical expense deduction may Bob and Cindy claim on their joint return? (Points : 5)
5. (TCO A) ***** *****, a cash-basis, calendar-year taxpayer, paid the following during the year.
Social security tax (withheld from wages): $4,500
Real estate taxes: $3,200
State income tax: $3,400
Special assessment for installation of sidewalks: $1,140
Penalty on tax underpayment: $300
Flat fee for automobile registration: $90
What itemized deduction may John claim for taxes on his return? (Points : 5)
6. (TCO E) Bob sold a piece of business equipment that had an adjusted basis to him of $50,000. In return for the equipment, Josh received $80,000 cash and a painting with a fair market value of $20,000 from the buyer. The buyer also assumed Josh's $25,000 loan on the equipment. Josh paid $5,000 in selling expenses. What is the amount of Josh's gain on the sale? (Points : 5)
7. (TCO I) In October of 2011, Bobby and ***** ***** sold their residence for $450,000. They purchased it in 2000 for $200,000. They made major capital improvements during their 10-year ownership, which totaled $40,000.
What is their recognized gain? (Points : 5)
8. (TCO I) Which of the following entities may select any tax period (calendar or fiscal)? (Points : 5)
9. (TCO D) For 2011, Greg Grammer had a short-term capital loss of $4,000, a short-term capital gain of $1,900, a short-term capital loss carryover from 2010 of $700, a long-term capital gain of $800, and a long-term capital loss of $1,000. What is Greg's deductible loss in 2011? (Points : 5)
10. (TCO A) The term "Practice before the IRS" refers to _____. (Points : 5)