1- 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? (Points : 17)
2- Randolph is a single individual who always claims the standard deduction. Randolph received the following in the current year:
|Pension distribution (100% taxable)
|A state tax refund from the previous year
What is Randolph’s gross income? (Points : 17)
3- For the year ended December 31, Year 6, Taylor Corp. had a net operating loss of $200,000. Taxable income for the earlier years of corporate existence, computed without reference to the net operating loss, was as follows:
Year 1 $ 5,000
Year 2 10,000
Year 3 20,000
Year 4 50,000
Year 5 50,000
What amount of net operating loss will be available to Taylor for the year ended December 31, Year 7? (Points : 17)
4-0A review of Bearing’s Year 2 records disclosed the following tax information:
|Taxable interest and qualifying dividends
|Schedule C trucking business net income
|Rental (loss) from residential property
|Limited partnership (loss)
Bearing actively participated in the rental property and was a limited partner in the partnership. Bearing had sufficient amounts at risk for the rental property and the partnership. What is Bearing’s Year 2 adjusted gross income? (Points : 17)
| Josh sold a piece of business property that had an adjusted basis to him of $50,000. In return for the property, Josh received $90,000 cash and a truck with a fair market value of $10,000 from the buyer. The buyer also assumed Josh’s $25,000 loan on the property. Josh paid $5,000 in selling expenses. What is the amount of Josh’s gain on the sale? (Points : 5)
|Steve, a calendar year taxpayer, purchased stock on November 18, 2011 for $17,000. The stock became worthless on January 4, 2012. What is Steve’s loss in 2012? (Points : 5)
$17,000 short-term capital loss
$17,000 itemized deduction for investments
$17,000 long-term capital loss
|Which of the following is a primary source of tax authority? (Points : 5)
Tax Court case
All of the above
|Question 18 8- (TCO F) A nonbusiness bad debt is deductible for tax purposes as a(n): (Points : 5)
short-term capital loss.
long-term capital loss.
ordinary business deduction.9-
|Question 15 (TCO G) On February 10, 2012, Rose was in an automobile accident while she was going to work. The doctor advised her to stay home for six months due to her injuries. On February 25, 2012, she filed a lawsuit. On July 20, 2012, Rose returned to work. On December 15, 2012, the lawsuit was settled and she received the following amounts:
- Compensation for lost wages: $25,000
- Personal injury damages awarded (none of which was for punitive damages): $40,000
How much of the settlement must Rose include in ordinary income on her 2012 tax return? (Points : 5)
|Question 16.10. (TCO F) Job-seeking expenses are deductible if incurred by an individual who is presently employed and looking for work in the same trade or business: (Points : 5)
only if the individual actually finds a new job.
regardless of whether or not the individual finds a new job.
if the expenses relate to the individual’s first job.
Both A and B
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