Questions -
1. Sam has $80,000 of net income from his sole proprietorship in 2012. What is his deduction for AGI for self-employment taxes?
a. $9,826
b. $6,120
c. $5,652
d. $4,913
2. At the beginning of the year, Jill's basis in her 40 percent limited partnership interest was $10,000. During the year, the partnership reported a loss of $90,000 and the partnership obtained a $40,000 recourse loan on some machinery. How much loss may Jill deduct if she has $40,000 of passive income?
a. $10,000
b. $16,000
c. $26,000
d. $36,000
e. None of the above
3. Stewart is a 30 percent general partner in STP Partnership. His basis in his partnership interest at the beginning of the year was $40,000. During the year, the partnership reported a $30,000 loss and paid off a $120,000 recourse debt. What is Stewart's year-end basis in his partnership interest?
a. 0
b. $4,000
c. $31,000
d. $67,000
3. Mary purchased 40 percent of an S corporation on February 28 of the current year and sells a 20 percent interest on November 30. If the corporation reports $10,000 of income for the year, what income does it report on Mary's Schedule K-1.
a. $7,534
b. $3,014
c. $4,000
d. $3,184
e. None of the above
4. What is Cheryl's AGI if she has a taxable salary of $34,000, receives $6,000 of alimony and $600 of interest on her various savings accounts, contributes $3,000 to her traditional IRA, and paid a $100 penalty for cashing in her Certificates of Deposit early?
a. $40,000
b. $39,600
c. $37,500
d. $36,900
5. John and Mary have two children, Anna, age 16, and Tammy, age 21. Anna works after school and earned $4,000 in 2012. Tammy works 30 hours per week and is a part-time student at the local community college. She earned $8,400 in 2012. John's mother also lives with them; she receives $7,800 in Social Security and $2,000 in interest income from some bonds. John and Mary provide over $10,000 towards her support. How many dependency exemptions may John and Mary claim on their joint tax return?
a. 1
b. 2
c. 3
d. 5
6. Toni is 61 and blind; her husband, Saul, is 67. What is their standard deduction if they file a joint tax return and what is the minimum amount of income they must have to be required to file a tax return, respectively?
a. $11,900; $20,650
b. $14,200; $20,650
c. $14,200; $22,450
d. $11,900; $22,450
7. Vera and Jake, a married couple with AGI of $321,000 for 2012, have $20,000 of mortgage interest, $8,000 of unreimbursed medical expenses, $4,000 of property taxes, and $9,000 of charitable contributions. How much may they claim for itemized deductions in 2012?
a. $41,000
b. $37 ,000
c. $33,000
d. $32,000
8. Cheryl bought some stock for $110,000. Two years later, she gave the stock to her brother, Harold, when its value was $100,000. Three years later, Harold sold the stock for $105,000. What is the value of the gift to Harold, and his gain or loss on the sale, respectively?
a. $100,000; 0 gain/loss
b. $100,000; $5,000 gain
c. $110,000; 0 gain/loss
d. $110,000; $5,000 loss
9. When will an insurance policy on the decedent's life be included in a decedent's gross estate?
a. The decedent could change the beneficiary.
b. The decedent paid the premiums.
c. The decedent gave the policy to his daughter two years ago.
d. Both (a) and (c).
e. Both (b) and (c).
10. The annual gift tax exclusion
a. cannot increase beyond $13,000 per donor.
b. does not apply to a bargain purchase between related persons.
c. applies to future interests.
d. removes small gifts from taxation.
e. Both (a) and (d).