Explore BrainMass
Share

Taxation multiple choice questions

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

16) Anne LLC purchased computer equipment (5-year property) on August 29 with a basis of $30,000 and used the half-year convention. During the current year, which is the fourth year Anne LLC owned the property, the property was disposed of on January 15. What is the maximum depreciation expense?

A. $1,728
B. $1,874
C. $432
D. $3,456

17) The sale of machinery for more than the original cost basis (before depreciation), used in a trade or business, and held for more than one year results in the following types of gain or loss:

A. Ordinary only
B. Capital and Section 1231
C. Capital and ordinary
D. Section 1245 and Section 1231

18) Bateman Corporation sold an office building that it used in its business for $800,000. Bateman bought the building ten years ago for $600,000 and has claimed $200,000 of depreciation expense. What is the amount and character of Bateman's gain or loss?

A. $200,000 ordinary and $200,000 Section 1231 gain
B. $400,000 ordinary gain
C. $40,000 ordinary and $360,000 Section 1231 gain
D. $400,000 capital gain

19) Generally, which of the following does not correctly categorize the type of income?

A. Salary - active income/loss
B. Dividends - portfolio income/loss
C. Rental real estate - passive income/loss
D. Capital losses - passive income/loss

20) Which of the following would be considered portfolio income?

A. Salary for part-time job
B. Dividends
C. Rental real estate income
D. Self-employment income for a business

21) On the sale of a passive activity, any suspended losses can be used to offset income from

A. capital gains
B. wages and tips
C. other passive activities
D. All answers are correct.

22) Sue invested $5,000 in the ABC Limited Partnership and received a 10 percent interest in the partnership. The partnership had $20,000 of qualified nonrecourse debt and $20,000 of debt she is not responsible to repay because she is a limited partner. Sue is allocated a 10 percent share of both types of debt. During the year, ABC LP generated a ($90,000) loss. How much of Sue's loss is disallowed due to her tax basis or at-risk amount?

A. $2,000 disallowed because of her at-risk amount
B. $2,000 disallowed because of her tax basis
C. Zero; all of her loss is allowed to be deducted.
D. $7,000 disallowed because of her tax basis

23) What is the correct order of the loss limitation rules?

A. at-risk amount, tax basis, passive loss limits
B. Passive loss limits, at-risk amount, tax basis
C. Tax basis, at-risk amount, passive loss limits
D. Tax basis, passive loss limits, at-risk amount

24) Harvey rents his second home. During 2009, Harvey reported a net loss of $35,000 from the rental. If Harvey is an active participant in the rental and his AGI is $80,000, how much of the loss can he deduct against ordinary income in 2009?

A. $25,000
B. $5,000
C. $35,000
D. $0

© BrainMass Inc. brainmass.com October 25, 2018, 8:00 am ad1c9bdddf
https://brainmass.com/business/accounting/taxation-multiple-choice-questions-522379

Solution Preview

16) Anne LLC purchased computer equipment (5-year property) on August 29 with a basis of $30,000 and used the half-year convention. During the current year, which is the fourth year Anne LLC owned the property, the property was disposed of on January 15. What is the maximum depreciation expense?

A. $1,728
B. $1,874
C. $432
D. $3,456

17) The sale of machinery for more than the original cost basis (before depreciation), used in a trade or business, and held for more than one year results in the following types of gain or loss:

A. Ordinary only
B. Capital and Section 1231
C. Capital and ordinary
D. Section 1245 and Section 1231

18) Bateman Corporation sold an office building that it used in its business for ...

Solution Summary

This solution provides the correct answers to the taxation multiple choice questions listed, including capital gains tax questions, dividend tax treatment, and basis and at-risk questions.

$2.19
See Also This Related BrainMass Solution

Multiple choice questions in taxation

1) The payment items that should be budgeted first are

A. variable expenses
B. unplanned living expenses
C. fixed expenses
D. investment funds

2) The current financial position (including net worth) of an individual or family is best presented with the use of a

A. cash flow statement
B. time value of money report
C. budget
D. balance sheet

3) A family with $45,000 in assets and $22,000 of liabilities would have a net worth of

A. $23,000
B. $67,000
C. $45,000
D. $22,000

4) Which of the following statements regarding tax credits is true?

A. Tax credits provide a greater tax benefit the greater the taxpayer's marginal tax rate.
B. None of the answer choices are correct.
C. Tax credits reduce taxable income dollar for dollar.
D. Tax credits reduce taxes payable dollar for dollar.

5) Which of the following statements is true?

A. Individuals generally report all excluded income on statements supporting their tax returns.
B. Always report annual licensing fees.
C. All income, whether realized or unrealized, is reported on the individual tax return.
D. Individuals generally report deferred income on their tax returns.

6) All of the following are for AGI deductions EXCEPT

A. rental and royalty expenses
B. charitable contributions
C. moving expenses
D. business expenses

7) Which judicial doctrine means that a court will rule consistently with its previous rulings and the rulings of higher courts with appellate jurisdiction?

A. The Goldman rule
B. Stare decisis
C. Judicial hierarchy
D. Judicial consistency

8) The regulation with the highest authoritative weight is the
A. interpretative regulation
B. legislative regulation
C. procedural regulation
D. proposed regulation

9) Jaime recently found a "favorable" trial level court opinion directly on point for her tax question. Which trial level court would he prefer to have issued the opinion?
A. District Court
B. Divorce Court
C. Tax Court
D. Circuit Court

View Full Posting Details