Short Answer- 20 Questions- 5 Points Each
1. Ch. 1- When was the first 1040 due under the Revenue Act of 1913?
2. For Ad Valorem tax purposes, what are some types of intangible personalty?
3. What is a Discriminant Index Formula (DIF) score?
4. Federal Tax Law generally originates in the
5. What are the Statutory Sources of the Tax Law?
6. What are the Administrative Sources of the Tax Law?
7. What are the Judicial Sources of the Tax Law?
8. How does IRC section 61(a) define gross income?
9. Explain the doctrine of Constructive Receipt
10. What is the taxable year?
11. Under what conditions are payments to an employee’s surviving spouse considered gifts?
12. What is the difference between deductions FOR AGI and Deductions FROM AGI?
13. Briefly explain the difference between business bad debts and non-business bad debts.
14. What is Section 1244 Small Business Stock, and, assuming certain conditions are met, how would you classify a loss from the sale of Section 1244 Small Business Stock?
15. Briefly define ACRS and MACRS.
16. What is Depletion?
17. According to Revenue Ruling 87-41, there are twenty factors that can be used to determine whether a worker is an employee or an independent contractor. List at least five of these.
18. Unreimbursed Employee Business Expenses are reported on what Schedule of Form 1040?
19. Income from rental activity is reported on what Schedule of 1040, and what Part?
20. Income from Partnerships and S-Corps is reported on what Schedule of 1040, what Part?
Computational Exercises– 10 Questions- 5 points each
21. (Ch. 15, CE 16). Andrew owns a lathe (adjusted basis of $40,000) that he uses in his business. He exchanges the lathe and $20,000 in cash for a new lathe worth $50,000. May Andrew avoid like-kind exchange treatment to recognize his realized loss of $10,000? Explain.
22. (Ch. 15, CE 19) Mandy and Timothy exchange equipment in a like-kind exchange. Mandy receives equipment with a fair market value of $28,000 and transfers equipment worth $20,000 (adjusted basis of $14,000) and cash of $8,000. What is Mandy's realized and recognized gain?
23. (Ch. 15, CE 25) Constanza, who is single, sells her current personal residence (adjusted basis of $165,000) for $450,000. She has owned and lived in the house for 30 years. Her selling expenses are $22,500. What is Constanza's realized and recognized gain?
24. (Ch. 15, Pr. 28) Kareem owns a pickup truck that he uses exclusively in his business. The adjusted basis is $22,000, and the fair market value is $14,000. Kareem exchanges the truck for a truck that he will use exclusively in his business.
What are Kareem's realized and recognized gain or loss?
25. Same problem as above. What is Kareem’s basis in the new truck?
Multiple Choice- 5 points each
26. Which of the following would be considered substantial authority for the assessment of additional tax under IRC § 6662?
27. What are pitfalls in interpreting the Internal Revenue Code?
28. In § 212(1), the number (1) stands for the _____.
29. Which item is not considered regulatory tax authority?
30. A taxpayer who loses in a U.S. District Court may appeal directly to the____.
31. A taxpayer may not appeal a case from which court?
32. Cash received by an individual _____
33. Which of the following is a taxable disposition (or are taxable dispositions) of an installment obligation?
34. Which of the following statements regarding a 52–53-week tax year is correct?
35. A C corporation is required to annualize its income _____.
36. William sold a capital asset on the installment basis and did not charge interest on the deferred payment due in 3 years. Which of the following is true?
37. The installment method can be applied to the following.
38. Which of the following is excludable from wage and salary taxable income?
39. Which of the following is not excludable from wage and salary taxable income?
40. Which of the following is not excludable from wage and salary taxable income?
41.(17 points) What is Material Participation? What are the tests for material participation? If a taxpayer fails to materially participate in an activity, then how are losses classified?
42. (17 points) What is the Alternative Minimum Tax? What was Congress’ intent in enacting the AMT? What is the formula for AMT?
43. (16 points) Explain the difference between tax deductions and tax credits.