Passive Activity

Reggie, a physican, earned $375,000 from his medical practice for the year. He also had $67,000 of net loss from a passive activity. What was his gross income for the year? A. 350,000 B. 308,000 C. 375,000 D. 442,000

Calculate the taxable amount for Herbert's annuity payments in 2008.

Herbert purchased a 10 year annuity for $96,000 late in 2008. The annuity will pay him $4,000 per month for ten years starting on Sept 1, 2008. How much of the $16,000 received this year will be taxable? A. 12,800 B. 16,000 C. 0 D. 3,200

Marginal Tax Rate: Mrs Scott after tax amount

21. Mrs. Scott received a $12,000 cash payment. If her marginal tax rate is 40%, which of the following statement is true? A. If only $9,200 of the payment is taxable income, her after-tax cash flow is $9,200 B. If the payment is not taxable income, her after-tax cash flow is $12,000 C. If the payment is taxable income, her ...continues

Bonus: John Carre's corporation bonus is deductible in which year?

Mr. John Carre owns 67% of the stock of JC inc. and is employed as the corporation's CEO. The corporation is a calendar year, accrual basis taxpayer. On December 14, 2008, JC's board of directors authorized a $45,000 year-end bonus for Mr. Carre, which was paid to him on February 1, 2009. In which year can JC Inc. deduct the bo ...continues

Section 1231: Characterize Hugo Inc's sale of assets

Hugo Inc., a calendar year taxpayer, sold two operating assets this year. The first sale generated a $38,700 Section 1231 gain and the second sale generated a $59,400 Section 1231 loss. As a result of these sales, Hugo should recognize: A. 20,700 ordinary loss B. 38,700 Section 1231 gain treated as capital gain and 59,400 or ...continues

Exemptions: Can Kent claim Martin as a dependent? What would be his filing status?

Kent allowed his elderly, widowed father, Martin, to move in with him late this year. Martin's only income was $8,000 in social security benefits. Kent provided $9,000 towards his father's total support of $17,000. What is Kent's filing status and total number of exemptions for the year? A. Single and one exemption B. Single ...continues

Which of the following statements describes a permanent book/tax difference?

Which of the following statements describes a permanent book/tax difference? A. An expense that is reported on this year's income statement but is deducted on next year's tax return B. A revenue item that is included in current year taxable income but is not reported on the income statement until next year C. An expense tha ...continues

Goodwill: Which of the following statements concerning business goodwill is false?

Which of the following statements concerning business goodwill is false? A. If a business creates goodwill by developing a loyal customer base and generating brand name recognition, the tax basis in the goodwill is zero. B. When a taxpayer purchases a business and capitalizes the cost allocated to goodwill, the cost basis ...continues

Transaction-base tax/ bond discount

True or False A tax on net income is an example of a transaction-based tax? and Individual taxpayers must recognize market bond discount in income as it accrues each year.

Computing cost of good (LIFO)

True or False. A firm can use LIFO for computing cost of goods sold only if it uses LIFO for financial reporting purposes.