ACCT 553 All Homework Week 1 - 6 + Week 8 Final Exam

ACCT 553 Week 1 Homework
ACCT 553 Week 2 Homework
ACCT 553 Week 3 Homework
ACCT 553 Week 4 Assignment; YouDecide
ACCT 553 Week 4 Homework
ACCT 553 Week 5 Homework
ACCT 553 Week 6 Assignment: YouDecide
ACCT 553 Week 8 Final ExamPage: 1 – Multiple Choice1.
(TCO E) For federal
tax purposes, income attributable to the direct efforts of the tax payer, such
as salary, is 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 and Amy file a joint return for the 2012 tax year.
Their adjusted gross income is $90,000. They had net investment income of
$8,000. In 2012, they had the following interest expenses: 
• Personal credit card interest: $5,000 
• Home mortgage interest: $10,000 
• Interest paid on qualified education loans: $2,000 
• Investment interest (on loans used to buy stocks): $10,000 
What is the interest deduction for Alex and Amy for the 2012 tax year? (Points
: 5) 
4. (TCO B) Unreimbursed expenses of employees are considered to be
deductions: (Points : 5) 
5. (TCO A) Which of the following expenditures is always an itemized
deduction for individual taxpayers? (Points : 5) 
6. (TCO E) Adam sold a piece of business equipment that had an
adjusted basis to him of $50,000. In return for the equipment, Adam received
$80,000 cash and a painting with a fair market value of $20,000 from the buyer.
The buyer also assumed Adam's $25,000 loan on the
equipment. Adam paid $5,000 in selling expenses. What
is the amount of Adam's gain on the sale? (Points : 5) 
7. (TCO I) Gary and Gerdy Gray
purchased a home for $125,000 on September 15, 2010. On October 7, 2011 they
were divorced, and as part of the divorce agreement, the home was transferred
to Gerda, who sold the home on October 18, 2012 for $350,000. How much can
Gerda exclude? (Points : 5) 
8. (TCO I) Under the accrual method
of accounting, expenses are generally accrued when: (Points : 5) 
9. (TCO D) Sean, a calendar year
taxpayer, purchased stock on June 18, 2011 for $8,000. The stock became
worthless on June 4, 2012. What is Sean's loss in 2012? (Points : 5) 
$8,000 short-term capital loss
10. (TCO A) Which of the following
is a primary source of tax authority? (Points : 5) 
11. (TCO F) A nonbusiness bad debt
is deductible for tax purposes as a(n): (Points : 5) 
12. (TCO A) The art of using
existing tax laws to pay the least amount of tax legally possible is known as:
(Points : 5) 
13. (TCO C) Which of the following
items is not taxable? (Points : 5) 
14. (TCO B) Under the terms of their
divorce agreement executed in October 2011, Keith transferred Corporation M
stock to his former wife, Karen, as a property settlement. At the time of the
transfer, the stock had a basis to Keith of $20,000 and a fair market value of
$50,000. What is the tax consequence of this transaction to Keith, and what is
Karen's basis in the Corporation M stock? (Points : 5) 
15. (TCO G) During 2012, Edward East
had wages of $10,000 and received unemployment compensation of $6,200 from the
state. Edward is single and 45 years old. What is the amount of unemployment
compensation to be included in his gross income? (Points : 5) 
16. (TCO F) Hobby expenditures are
deductible to the extent of: (Points : 5) 
Page: 1 - Essays1. (TCO E) In 2012, Uriah Stone received the following payments:
Interest on refund of federal income tax for 2011: $400•
Interest on award for personal injuries in 2009 automobile accident: $300•
Interest on municipal bonds: $1,500•
United States savings bonds interest (Series H): $1,000What
amount, if any, should Mr. Stone report as interest income on his 2012 tax
return?2. (TCO G) Would any of the following items be deductible on an
individual's income tax return? If so, would the item be deductible for or from
AGI? Explain each item.
Hobby expenditures of $2,000 in excess of hobby gross income(b)
$3,000 loss on the sale of a personal sailboat(c)
Interest of $8,000 on money borrowed to purchase tax-exempt securities (Points
: 17)3. (TCO F) Michael and Mary Mason sold for $380,000 in November of
2012 their residence that they had purchased in 2002 for $75,000. They made
major capital improvements during their 10-year ownership totaling $25,000.
What is their excluded gain? How much must they recognize?(b)
Suppose, instead, that the Masons sold their home for $720,000. They moved into
a smaller house costing $220,000. What is their excluded gain? How much must
they recognize? (Points : 17)4. (TCO G) John Baron, a professional baseball player, raises Black
Angus cattle under circumstances that would indicate that the activity is a
hobby. His adjusted gross income for the year is $50,000, and he has $500 of
other miscellaneous itemized deductions, all of which are subject to the
two-percent floor. During the taxable year, the feed for the cattle cost
$1,500. The income from the sale of cattle was $1,400.
Under the hobby loss rule, to what extent is the expense of $1,500 deductible?(b)
Under the two-percent-of-adjusted-gross-income limitation, how much is the
overall deductible amount of his itemized deductions? 5. (TCO I) Rick, a single individual with a salary of $45,000,
incurred and paid the following expenses during the year:
loan interest: $800Medical
expenses: $5,000Alimony:
interest on personal residence: $3,000State
income taxes: $4,000Moving
expenses: $1,500Contribution
to a traditional IRA: $2,000Analyze
the above expenses, and determine which ones are deductible for AGI. Please
support your position. 6. (TCO I) Kim had the following transactions for 2012:Salary:
award (compensatory) for city bus accident: $18,000Loss
on sale of stock investment: $5,600Loan
from father to purchase auto: $14,000Alimony
paid to ex-wife: $8,000What
is Kim's AGI for 2012? 7. (TCO F) Sara owns a sole proprietorship, and Phil is the sole
shareholder of a C (regular) corporation. Each business sustained a $9,000
operating loss and a $2,000 capital loss for the year. Evaluate how these
losses will affect the taxable income of the two owners? (Points : 17)
8. (TCO B) Dave forms a corporation and transfers property having a basis to him of $22,000 and a fair market value of $29,000 to the corporation for 1,000 shares of $11 par stock. One year later, Hank transfers property having a basis to him of $3,500 and a fair market value of $4,500 for 100 shares of the stock. Hank is not related to Dave. The corporation issued no other stock.
(a) How much gain does Dave recognize on his exchange? What is the basis to
Dave of his 1,000 shares?
(b) What gain or loss is recognized by the corporation when it issues its
shares to Dave? What is the basis to the corporation of the property it
received from Dave?
(c) What is the gain or loss that Hank recognizes on this transaction, and what
is his basis in his 100 shares? 
9. (TCO F) In 2012, OK Company had a net loss of $82,000 from
operations. Jane owns OK Company and works 20 hours a week in the business. She
has a large amount of income from other sources and is in the 35% marginal tax
bracket. Would Jane's tax situation be better if OK Company were a
proprietorship or a C corporation? Explain why.

10. (TCO H) On May 18, 2012, Sara purchased 30 shares of ABC stock for
$210, and on October 29, 2012, she purchased 90 additional shares for $900. On
November 28, 2012, she sold 48 shares, which could not be specifically
identified, for $576, and on December 8, 2012, she sold another 25 shares for
$150. What is her recognized gain or loss?
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