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32. Mr. and Mrs. Twig are both under 65 years of age and have no dependents. Their only income for the year was
his salary of $15,500. During the year they made only a nominal amount of disbursements of the type that qualify as
itemized deductions. What is their standard deduction on a 2011 joint return?
a. $3,700
b. $11,600
c. $5,800
d. $8,500
e. None of the above
33. Jerry Jenkins is over 65 years of age and has no dependents. His only income was his salary of $10,500. During
the year, he made only a nominal amount of disbursements of the type that qualify as itemized deductions of $3,290.
What is his standard deduction for 2011?
a. $5,800
b. $3,700
c. $7,250
d. $3,290
e. None of the above
34. What is Jerome Jacksons standard deduction for 2011 if he has $20,000 in wages and fi les married filing
separately? He also claims one of the two children.
a. $5,800
b. $4,850
c. $11,600
d. $3,700
e. None of the above
35. What is the amount of standard deduction for Abigale Abrams in 2011, a divorced parent, who fully supports her
five-year-old daughter?
a. $5,800
b. $8,500
c. $11,600
d. $7,400
e. None of the above
36. Determine the amount of taxable income of Michael Manx in 2011, who is single and has $300 of wages
and$2,000 of interest income for the year. He is claimed as a dependent by his parents.
a. $2,000
b. $2,300
c. $1,350
d. $300
e. $0
37. Marvin Miller, who is claimed as a dependent by his parents, received income of $3,100 from a trust fundand
$500 from wages. Marvin had $1,050 in itemized deductions. What is Marvins taxable income?
a. $2,650
b. $3,600
c. $2,550
d. $1,700
c. $25,000
d. $32,800
e. $34,800
MULTIPLE CHOICE QUESTIONSCHAPTER 5
27. Mr. W. is 66 years old and single. His income for 2011 consisted of the following:
Taxable pension $10,000
Taxable interest 2,000
Taxable dividends 5,000
Social security payments 5,000
Tax-exempt interest 7,000(sum =26500) less base amount 25000=1500, 50% excess =750
He did not have any adjustments to income. What amount of Ws social security benefits is taxable?
a. $0
b. $750
c. $1,500
d. $2,000
28. Mr. and Mrs. Birch are both over 65 years of age and are fi ling a joint return. Their income for 2011 consisted of
the following:
Taxable interest $6,000
Taxable dividends 8,000
Social security payments (Mr. and Mrs. Birch combined) 15,000 = 7500
Tax-exempt interest 4,000
Taxable pension 15,000sum = (40500-base 32000)=8500/2 = 4250
They did not have any adjustments to income. What amount of Mr. and Mrs. Birchs social security benefits is
taxable?
a. $0
b. $4,250
c. $7,500
d. $7,750
29. During 2011, Anne Apple received tangible personal property as a safety achievement award from her employer.
The award was not a qualified plan award. The property cost the employer $500 and had a fairmarket value of $600.
How much must Anne include in her 2011 gross income?
a. $0
b. $200
c. $500
d. $600
30. During 2011, Edward East had wages of $10,000 and received unemployment compensation of $6,200 from
thestate. Edward is single and 45 years old. What is the amount of unemployment compensation to be included in
hisgross income?a. $0
b. $2,100
c. $4,200
d. $6,200
31. On June 3, 2011, Leon Wren, an electrician, was injured in an accident during the course of his employment.As a
result of injuries sustained, he received the following payments during 2011:Damages for personal injuries $8,000
Workers compensation 3,000; Reimbursement from his employers accident and health plan for medical expenses
paid by Wren 1,200The amount to be included in Wrens 2011 gross income should be:
a. $0
b. $1,200
c. $3,000
d. $12,200
TRUE-FALSE QUESTIONSCHAPTER 6
1. An ordinary expenditure is one which is commonly incurred by other businesses.TRUE
2. Hobby expenditures are deductible to the extent of hobby gross income.TRUE
3. If an employee accounts to the employer for business-related expenses and is reimbursed by the employer, the
expenses must still be reported on the employees tax return.FALSE
4. Job-seeking expenses are not deductible if an individual finds a job in a new trade or business.TRUE
5. Rents and royalties expenses are deductible from adjusted gross income.FALSE
6. Tax deductions for tax planning and tax compliance expenses may only be claimed for expenses incurred in
planning and compliance with respect to federal and state income taxes.FALSE
7. The Cohan case set a requirement for tax purposes that adequate substantiation is required for every tax
deduction claimed on a tax return.FALSE
8. Advertising which is intended to influence public reaction to proposed legislation normally is not a deductible
business expense for tax purposes.TRUE
9. The amount of a bad debt deduction is always limited to the adjusted basis of the debt in the hands of the
taxpayer.TRUE
10. Full worthlessness of a debt must be proven in order to claim a business bad debt deduction.FALSE
MULTIPLE CHOICE QUESTIONSCHAPTER 7
31. Ann Jones uses a dry cleaning machine in her business, and it was completely destroyed by fire. At the timeof the
fire, the adjusted basis was $20,000 and its fair market value was $18,000. How much is Anns loss?
a. $18,000
b. $2,000
c. $20,000
d. None of the above
32. Ann Jones uses a dry cleaning machine in her business, and it was partially destroyed by fire. At the time ofthe
fire, the adjusted basis was $20,000 and its fair market value was $18,000. The adjusted basis after the fireis $10,000
and the fair market value after the casualty is $10,000. How much is the casualty loss?
a. $10,000
b. $8,000
c. $18,000
d. $20,000
33. ABC, Inc. of Jasper, Georgia suffered a casualty loss of $150,000 in March 2011. This loss was caused byheavy
rains that completely flooded their factory. As a result of these rains, the President declared NorthGeorgia (including
Jasper) a disaster area on March 23, 2011. In what year can ABC, Inc. elect to deduct the
casualty loss?
a. 2011 or 2012
b. 2010 or 2011
c. 2011
d. 2010