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ACCT 553 Week 8 Final Exam Set 4

ACCT 553 Week 8 Final Exam Set 4

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Author: Christine Farr
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1. (TCO E) Interest, dividends, and annuities income are classified as _____. (Points : 5)
2. (TCO D) Which of the following is an example of a nontaxable; like-kind exchange? (Points : 5)
3. (TCO H) Alex files a tax return for the 2010 tax year. His adjusted gross income is $50,000. He had a net investment income of $9,000. In 2010, he had the following interest expenses.

Personal credit card interest: $4,000
Home mortgage interest: $8,000
Investment interest (on loans used to buy stocks): $15,000

What is the interest deduction for Alex for the 2010 tax year? (Points : 5)
4. (TCO B) Mark Miller paid the following medical expenses during the year (all in excess of reimbursement).

Hospital and doctor bills (for self and wife): $840
Medicine and drugs (for self and wife): $730
Hospitalization insurance premiums: $6,200
Medicine and drugs (for dependent mother, age 71): $1,060

Assuming that Mark's adjusted gross income was $60,000, how much of a medical-expense deduction may Mark claim on his return? (Points : 5)
5. (TCO A) The following taxes were paid by Adam Smith.

Real estate taxes on his home: $3,000
State income taxes: $900
Cigarette taxes: $500
State gasoline tax (personal use of automobile): $150
Social security tax (withheld from wages): $5,500
Penalty on tax underpayment: $800

In itemizing his deductions, what is the amount that Adam may claim as a deduction for taxes? (Points : 5)
6. (TCO E) Josh sold a piece of business equipment that had an adjusted basis to him of $50,000. In return for the equipment, Josh received $90,000 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, David and Betty Bennett sold their residence for $400,000. They purchased it in 2000 for $200,000. They made major capital improvements during their 10-year ownership, which totaled $80,000.

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) Tom Smith had a short-term capital loss of $3,000 in 2010, a short-term capital gain of $1,900, a short-term capital loss carryover from 2010 of $700, a long-term capital gain of $1,800, and a long-term capital loss of $1,000. What is Tom's deductible loss in 2010? (Points : 5)
10. (TCO A) The term "Practice before the IRS" refers to _____. (Points : 5)
11. (TCO F) To be deductible for tax purposes, a trade or business expenditure must be _____.
12. (TCO A) Which of the following does not constitute tax evasion? (Points : 5)
13. (TCO C) Which of the following items is not subject to federal income tax? (Points : 5)
14. (TCO B) Sam owes Bob $8,000. Bob cancels (forgives) the debt. The cancellation is not a gift, and Sam is bankrupt. Which of the following statements is correct concerning the impact of this transaction? (Points : 5)
15. (TCO G) All of the following income items are includible in an employee's gross income except _____. (Points : 5)


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