1. What statement is not true with respect to Temporary Regulations?
a. May be cited as precedent.
b. Issued as Proposed Regulations.
c. Automatically expire within three years after the date of issuance.
d. Found in the Federal Register.
e. All of the above statements are true.
2. Which statement is true with respect to letter rulings?
a. They are issued by the Regional Offices of the IRS.
b. They deal with completed transactions.
c. They may be requested for limited areas of taxation.
d. They are issued at the request of the IRS.
e. All of the above.
3. A taxpayer who loses in the U.S. Tax Court may appeal directly to the:
a. U.S. District Court.
b. U.S. Supreme Court.
c. U.S. Court of Appeals (Regional Circuit).
d. U.S. Court of Appeals (Federal Circuit).
e. None of the above.
4. In 2010, Gomez had the following transactions:
Alimony received $ 5,000
Salary earned 50,000
Cash dividends received on stock investment 1,000
Bequest received 30,000
Gomez's AGI for 2010 is:
a. $50,000.
b. $45,000.
c. $56,000.
d. $86,000.
e. None of the above.
5. In 2010, Shauna had the following transactions:
Wages earned $40,000
Football pool prize 10,000
Interest Income from Colorado Bonds 6,000
Contribution to traditional Individual Retirement Account (IRA) 5,000
Medical insurance premium payments 2,000
Shauna's AGI for 2010 is:
a. $45,000.
b. $50,000.
c. $51,000.
d. $56,000.
e. None of the above.
6. Emily, age 70, is claimed as a dependent on her son's tax return. During 2010, she had interest income of $2,700 and $900 of wages from a part-time job. Emily's taxable income is:
a. $-0-.
b. $1,000.
c. $1,250.
d. $2,650.
e. None of the above.
7. Which, if any, of the following is a deduction for AGI?
a. Real estate taxes paid.
b. Mortgage interest paid.
c. State income taxes withheld.
d. Contribution to Individual Retirement Account.
e. All of the above.
8. Frank and Zarina are married and under 65 years of age. During 2010, they furnish more than half of the support of their 18-year old son, Kiko. Kiko earns $22,500 from a part-time job, most of which he sets aside for future college expenses. During 2010, they also furnish more than half of the support of their 22-year old son, Russell, who is a full-time college student. Russell earns $4,500 from a part-time job, most of which he currently spends for college expenses. Frank and Zarina also provide more than half of the support of Frank's cousin who lives with them for the entire year. How many personal and dependency exemptions should Frank and Zarina claim?
a. Two.
b. Three.
c. Four.
d. Five.
e. Six.
9. During 2010, Joan sold the following assets: business equipment for a $5,000 loss, stock investment for a $7,000 loss, and her principal residence for a $16,000 loss. Presuming adequate income, how much of these losses may Joan claim on her 2010 return?
a. $3,000.
b. $8,000.
c. $12,000.
d. $28,000.
e. None of the above.
10. The Galaxy Co., an accrual basis taxpayer, allows its customers to pay by the month ($60 each month), by the year ($600 per year), or two years in advance ($1,000). In December 2010, the company collected the following amounts applicable to future services:
January 2011 - December 2012 services (two year contracts) $180,000
January - December 2011 services (annual contracts) $600,000
January 2011 services (monthly contracts) $720,000
The income from the above that must be reported as gross income for 2010 is:
a. $0.
b. $180,000.
c. $720,000.
d. $900,000.
e. $1,500,000.\