An individual taxpayer received rental income from real estate that was rented below market value to a not-for-profit organization. On what form should the rental income be reported?

In which of the following situations may taxpayers file as married filing jointly?

Which of the following is excluded from gross income on an individual’s year 4 tax return?

A taxpayer is the sole beneficiary of two life insurance policies:

$300,000 policy on aunt

$200,000 policy on brother

Both the taxpayer's aunt and brother died unexpectedly this year. The taxpayer accepts his brother's $200,000 life insurance policy proceeds as a lump sum and elects to receive aunt's $300,000 policy in 24 installments of $15,000 each. If the taxpayer receives the $200,000 in a lump sum and only four of the 24 payments from the $300,000 in the current year, what amount, if any, is taxable this year?

A taxpayer was the owner and beneficiary of a $200,000 life insurance policy on a parent. The taxpayer sold the policy to a friend for $25,000. The friend paid a total of $40,000 in premiums. Upon the death of the parent, what amount, if any, must the friend include in gross income?

The Rites are married, file a joint income tax return, and qualify to itemize their deductions in the current year. Their adjusted gross income for the year was $55,000, and during the year they paid the following taxes:

Real estate tax on personal residence $2,000

Ad valorem tax on personal automobile $500

Current-year state and city

income taxes withheld from paycheck $1,000

What total amount of the expense should the Rites claim as an itemized deduction on their current-year joint income tax return?

A cash-basis taxpayer should report gross income

In year 4 Adams, an individual, changed residences and converted her former residence into a passive rental activity. In 20X14 Adams lived in the former residence for 60 days, incurred $7,000 in qualifying expenses preparing the property for rental, and rented it to a tenant for 90 days, receiving $3,000 in rent. Before considering the rental activity, Adams’ adjusted gross income for year 4 is $120,000. After considering the rental activity, what should Adams’ year 4 adjusted gross income be?

An individual taxpayer's tax return included the following:

Regular tax before tax credits$5,000

Current year estimated tax payments$6,000

Amount paid with current-year extension$1,000

Federal income tax withheld$1,000

What amount, if any, is the taxpayer's overpayment?

An individual taxpayer wrote a book 2 years ago. The taxpayer continues to receive quarterly payments from the publisher for the right to use the book. This income should be reported on

An individual paid $5,000 in self-employment taxes throughout the year. What amount is the allowable adjustment to income related to self-employment tax?

In which of the following scenarios would the head of household filing status be available to the taxpayer?

With regard to the inclusion of social security benefits in gross income, which of the following statements is correct?

Ashanti plans on hiring a business coach to help with her small business. She can either pay the business coach $1,200 in January 20X6, or take advantage of a $200 early bird discount and pay the coach $1,000 in December 20X5. Ashanti’s marginal tax rate is 15% in 20X5 and her expected marginal tax rate for 20X6 is 28%.

In order to minimize her post-tax, net business expenditure in this instance, when should Ashanti pay for the business coaching and why? Ignore the time value of money.

Which of the following items are included in determining the total support of a dependent?

I. Medical expenditures paid on behalf of the dependent

II. Life insurance premiums paid on behalf of the dependent.

III. Fair rental value of dependent’s lodging

Alex and Myra Burg, married and filing joint income tax returns, derive their entire income from the operation of their retail candy shop. Their 20X1 adjusted gross income was $50,000. The Burgs itemized their deductions on Schedule A for 20X1. The following unreimbursed cash expenditures were among those made by the Burgs during 20X1:

State income tax 1,200

Self-employment tax 7,650

What amount should the Burgs deduct for taxes in their itemized deductions on Schedule A for 20X1?

Johnson worked for ABC Co. and earned a salary of $100,000. Johnson also received, as a fringe benefit, group term-life insurance at twice Johnson's salary. The annual IRS-established uniform cost of insurance is $2.76 per $1,000. What amount must Johnson include in gross income?

A child, age five, is claimed as a dependent on the parents' tax return. The child has $3,000 of interest income, no earned income this year, and will file a tax return. Assuming the current applicable standard deduction is $1,100, how much of the child's income will be taxed at the parents' tax rates?

Which of the following credits can result in a refund even if the individual has no income tax liability?

Rigg, Steele, and Urco, all accrual-basis, calendar-year C corporations, have only voting common stock outstanding. Rigg owns 85 percent of Steele and 40 percent of Urco. Steele owns 50 percent of Urco. Which group of corporations qualifies as an affiliated group and may join in the filing of a consolidated federal income tax return?

Fox, the sole shareholder in Fall, a C corporation, has a tax basis of $60,000. Fall has $40,000 of accumulated positive earnings and profits at the beginning of the year and $10,000 of current positive earnings and profits for the current year. At year end, Fall distributed land with an adjusted basis of $30,000 and a fair market value (FMV) of $38,000 to Fox. The land has an outstanding mortgage of $3,000 that Fox must assume. What is Fox's tax basis in the land?

Regarding the tax treatment of corporate consolidations, which of the following statements is true?

A non-liquidating distribution from a C corporation to a shareholder cannot be treated by the shareholder as which of the following classifications?

In Year 2, Acorn Inc. had the following items of income and expense:

Sales. $500,000

Cost of sales 250,000

Dividends received. 25,000

The dividends were received from a corporation of which Acorn owns 30%. In Acorn's Year 2 corporate income tax return, what amount should be reported as income before special deductions?

Beta, a C corporation, reported the following items of income and expenses for the year:

Gross income $600,000

Dividend income from a 30%

owned domestic corporation $100,000

Operating expenses $400,000

Jagdon Corp.'s book income was $150,000 for the current year, including interest income from municipal bonds of $5,000 and excess capital losses over capital gains of $10,000. Federal income tax expense of $50,000 was also included in Jagdon's books. What amount represents Jagdon's taxable income for the current year?

At the beginning of the year, Data, a C corporation, had a $45,000 deficit in accumulated earnings and profits. For the current year, Data reported earnings and profits of $15,000. Data distributed $18,000 to its shareholders during the current year. What amount of the distribution is treated as a taxable dividend?

Pope, a C corporation, owns 15% of Arden Corporation. Arden paid a $3,000 cash dividend to Pope. What is the amount of Pope's dividends received deduction?

Which type of corporate reorganization, as defined by the Internal Revenue Code, involves an acquirer using voting stock to acquire at least 80% of the target’s net assets?

On January 1 of the current year, Smythe Corp., an accrual-basis calendar-year C corporation, had $60,000 in accumulated earnings and profits. For the current year, Smythe had current earnings and profits of $40,000, and made two $80,000 cash distributions to its shareholders, one in February and one in August. What amount of the distributions is classified as dividend income to Smythe's shareholders?

The corporate dividends-received deduction:

Which of the following must be added to net income per books on the Schedule M-1, Reconciliation of Income (Loss) per Books With Income per Return, of Form 1120, U.S. Corporation Income Tax Return, to reconcile book income to taxable income?

Birch Corp. is an accrual-basis, calendar-year C corporation. Its reported book income before federal income taxes was $250,000, which included $46,000 in municipal bond interest income. Birch's book expenses included $4,000 of interest incurred on indebtedness used to carry the municipal bonds. What should be the amount of Birch's taxable income, as reconciled on Birch's Schedule M-1, Reconciliation of Income (Loss) per Books with Income per Return, of Form 1120, U.S. Corporation Income Tax Return?

Which of the following statements best describes Global Intangible Low-Taxed Income (GILTI)

During the year, a corporation declares a dividend and subsequently distributes to a stockholder $15,000 in cash and a bond with a basis of $25,000 and a fair market value of $26,000 on the date of distribution. The bond had a fair market value of $26,500 on the date that the corporation declared the dividend. The corporation has current earnings and profits in excess of the total amounts distributed during the year. Which of the following identifies the tax consequences of the distribution to the stockholder?

On January 1, Year 9, Locke Corp., an accrual-basis, calendar-year C corporation, had $30,000 in accumulated earnings and profits. For Year 9, Locke had current earnings and profits of $20,000 and made two $40,000 cash distributions to its shareholders, one in April and one in September of Year 9. What amount of the Year 9 distributions is classified as dividend income to Locke's shareholders?

Andi Corp. issued $1,000,000 face amount of bonds in year 5 and established a sinking fund to pay the debt at maturity. The bondholders appointed an independent trustee to invest the sinking fund contributions and to administer the trust. In year 10, the sinking fund earned $60,000 in interest on bank deposits and $8,000 in net long-term capital gains. All of the trust income is accumulated with Andi's periodic contributions so that the aggregate amount will be sufficient to pay the bonds when they mature. What amount of trust income was taxable to Andi in year 10 ?

Smart Corp., a calendar-year corporation, was formed in 20X3 and made an S corporation election in 20X6 that is still in effect. Its books and records for Year 10 reflect the following information:

Accumulated earnings and profits at 1/1/X13 $ 90,000

Accumulated adjustments account at 1/1/X13 50,000

Ordinary income for Year 20X13 200,000

Smart Corp. is solely owned by Roget, whose basis in Smart’s stock was $100,000 on January 1, 20X13. During 20X13, Smart distributed $310,000 to Roger. What is the amount of the $310,000 distribution that Roger must report as dividend income for 20X13 assuming no special elections were made with regard to the distribution?

Village Corp., a June 30 fiscal-year-end corporation, began business in Year 1. Village made a valid S Corporation election on September 5, Year 8, with the unanimous consent of its shareholders. The eligibility requirements for S status were met throughout Year 8. On what date did Village's S status become effective?

Monie, an individual taxpayer, owns 50% of Monie & Co, an S corporation. At the beginning of 20X4, Monie’s basis in Monie & Co was $55,000. During 20X4, Monie & Co realized ordinary loss in the amount of $45,000 and a short-term capital loss of $15,000. Monie & Co made total distributions of $70,000 to its shareholders during this taxable year. What is Monie’s resulting basis in Monie & Co after accounting for the above items?

A taxpayer owned 40% of the outstanding stock of a C corporation. During the tax year, the corporation reported $400,000 in taxable income and distributed a total of $70,000 in cash dividends to its shareholders. The taxpayer accurately reported $28,000 in gross income on their individual tax return. If the corporation had been an S corporation and the distributions to the owners had been proportionate, how much income would the taxpayer have reported on their individual return?

On January 1 of the first year of operation, an investor paid $10,000 for a 20% interest in Biga, an S corporation. During the same year, Biga earned $10,000 taxable income and $2,000 tax-exempt interest. Biga paid dividends totaling $1,000 to its shareholders during the same year. What is the investor's tax basis in the shares of Biga at the end of the year?

A company terminated its S corporation status for the current tax year. When can the company reelect S status?

Beech Corp., an accrual-basis, calendar-year S corporation, has been an S corporation since its inception. At the beginning of the current year, Gold owned 50% of the 100 issued shares of Beech stock, and had a $3,000 tax basis in the Beech stock. During the current year, Beech had $200,000 in net business income and $4,000 in Oak County municipal bond interest income. Beech made no distributions to its shareholders. What was Gold's tax basis in Beech stock at year end?

On February 10, Year 4, Ace Corp., a calendar-year corporation, elected S corporation status and all shareholders owning shares as of that date consented to the election. Consent was not received from a shareholder who sold all their shares on January 15, Year 4. Ace met all other eligibility requirements for S status during the preelection portion of the year. What is the earliest date on which Ace can be recognized as an S corporation?

Monie, an individual taxpayer, owns 50% of Monie & Co, an S corporation. At the beginning of 20X4, Monie’s basis in Monie & Co was $55,000. During 20X4, Monie & Co realized ordinary loss in the amount of $45,000 and a short-term capital loss of $15,000. Monie & Co made total distributions of $70,000 to its shareholders during this taxable year. What amount of the $70,000 distribution is taxable to Monie?

An individual taxpayer, a 25% shareholder in an S corporation, had a stock basis of $10,000 at the beginning of the year. The corporation had ordinary income of $200,000 for the year. There were no separately stated items. The taxpayer received wages from the corporation of $25,000 and a distribution of $30,000. What was the taxpayer's basis in the stock at year end?

Vale is a 50% partner in Ball Partnership. Vale's tax basis in Ball on January 2, Year 1, was $60,000. Ball did not have unrealized receivables, appreciated inventory, or properties that had been contributed by its partners. On December 31, Year 1, Ball made a $10,000 nonliquidating cash distribution to each partner. The Ball Partnership income tax return reported the following items for Year 1:

Tax-exempt interest income$80,000

Dividend income12,000

What total amount of gross income from Ball should be included in Vale's Year 1 adjusted gross income?

The method used to depreciate partnership property is an election made by

Gulde's tax basis in Chyme Partnership was $26,000 at the time Gulde received a liquidating distribution of $12,000 cash and land with an adjusted basis to Chyme of $10,000 and a fair market value of $30,000. Chyme did not have unrealized receivables, appreciated inventory, or properties that had been contributed by its partners. What was the amount of Gulde's basis in the land?

A partnership made a nonliquidating distribution to a partner. Which of the following lists the proper allocation order of the distributed assets accounted for by the distributee partner?

The basis to a partner of property distributed "in kind" in complete liquidation of the partner's interest is the

What is the tax treatment of net losses in excess of the at-risk amount for an activity?

Beck and Nilo are equal partners in B & N Associates, a general partnership. B & N borrowed $10,000 from a bank on an unsecured note, thereby increasing each partner's share of partnership liabilities. As a result of this loan, the basis of each partner's interest in B & N was

Smith received a one-third interest of a partnership by contributing $3,000 in cash, land, and a computer. The land has a fair market value of $5,000, and a cost of $2,000 and it is subject to a $900 mortgage. The computer has a fair market value of $2,000 and had an original cost of $2,500 and accumulated depreciation of $1,500. As a condition of the contribution, Smith paid off the mortgage on the land. Which of the following amounts represents Smith's basis in the partnership?

Tally and Bailey form the Pelion Partnership. Tally contributed $175,000 for a 70% partnership interest. Bailey contributed land with a fair market value of $75,000 and an adjusted basis of $25,000 to the partnership in exchange for a 30% interest. The partnership assumed Bailey's $10,000 recourse mortgage on the land. What is Tally's basis in her partnership interest?

Three equal partners formed Partnership XYZ by each contributing $100,000 to the partnership. In the first year of operations, an $800,000 rental property was purchased in exchange for $200,000 in cash and a $600,000 recourse obligation. The partnership earned net income of $30,000 in its first year. What amount was each partner's basis in the partnership at the end of the first year?

The CPA was preparing the financial statements for a limited liability company. To which of the following would the CPA's report be addressed?

When computing the ordinary income of a partnership, the partnership may take a deduction for which of the following items?