1. In 2013, Rocio invested $30,000 in a cattle-feeding partnership that used nonrecourse notes to purchase $100,000 of feed, which was used to feed the cattle and expensed. If Rocio's share of the expense was $50,000, what is the most that Rocio can deduct in 2013?
a. $100,000
b. $50,000
c. $30,000
d. $20,000
2. Gema, a corporate executive, exercised an incentive stock option ("ISO") granted by Gema's employer to purchase 1,000 shares of the corporation's stock at the option price of $1 per share (i.e., the exercise price was $1 per share). The stock is freely transferable. At the time the option was exercised, the stock was selling for $11 per share. What is the AMT adjustment that results from Gema exercising the ISO (assume that Gema will NOT dispose of any of the stock during the year)?
a. $0
b. $10,000
c. $11,000
d. $12,000
3. Wilny, a single parent, lives in an apartment with Wilny's THREE minor children all under age 12, whom Wilny supports. For 2013, Wilny will have AGI and earned income of $20,000. Calculate the amount, if any, of Wilny's earned income credit.
a. $0
b. $3,000
c. $5,523
d. $6,044
4. Pedro and Tamella are married and file a joint return. In 2013, Tamella worked fulltime and earned $15,000, while Pedro worked fulltime and earned $19,000. Assume their 2013 AGI equaled $34,000. Assume they incurred $5,000 of child care expenses during 2013 for their ONE dependent child, Melissa (who is 5 years old). What is their child and dependent care CREDIT amount?
a. $5,000
b. $3,000
c. $1,000
d. $750
5. In 2006, Dy received stock from Parbat worth $50,000 at the time of the GIFT. At the time of the gift, Parbat's adjusted basis in the stock was $75,000. What is the gain or loss that Dy should report for 2013 if she sold the stock to Tanzina in 2013 for $70,000 (ignore any gift tax that may have been paid on the transfer from Parbat to Dy)?
a. There is no gain or loss
b. $70,000 gain
c. $20,000 gain
d. $5,000 loss
6. Now, assume that in the previous question Dy sold the stock to Tanzina for $100,000 (instead of $70,000). What is the gain or loss that Dy should report (again, ignore any gift tax that may have been paid on the transfer from Parbat to Dy)?
a. There is no gain or loss
b. $100,000 gain
c. $50,000 gain
d. $25,000 gain
7. Now, assume that in Question 5 Dy sold the stock to Tanzina for $20,000 (instead of $70,000). What is the gain or loss that Dy realized on the sale to Tanzina (again, ignore any gift tax that may have been paid on the transfer from Parbat to Dy)?
a. There is no gain or loss
b. $55,000 loss
c. $30,000 loss
d. $20,000 gain
8. Jeff traded in office equipment with an adjusted basis of $40,000 (and value of $70,000) for other (like-kind) office equipment then valued at $50,000. Jeff also received $20,000 in cash as part of the deal. What was Jeff's recognized gain on the exchange, if any?
a. $70,000
b. $30,000
c. $20,000
d. $0
9. Moses traded in computer equipment with an adjusted basis of $30,000 (and a value of $40,000) for other (like-kind) computer equipment then valued at $35,000. Moses also received $5,000 in cash as part of the deal. What was Moses's realized gain on the exchange, if any?
a. $40,000
b. $10,000
c. $5,000
d. $0
10. In 2013, Alisha and Gabriel sold a house to Yenisey for $1,000,000. Prior the 2013 sale, neither Alisha nor Gabriel had ever excluded a gain from the sale of a personal residence. Alisha and Gabriel had lived in the house for the last five years and used it exclusively for personal purposes. Alisha and Gabriel had purchased the house for $200,000. Alisha and Gabriel started living in the house immediately after purchasing it and never made any capital improvements to the house or took any depreciation (or other deductions) against it. Assume there were no selling expenses. How much of a gain did Alisha and Gabriel realize on the sale to Yenisey (assume that Alisha and Gabriel are married and file a joint return)?
a. $300,000
b. $500,000
c. $800,000
d. $1,000,000