Roberta Warner and Sally Roger formed the Acme Corporation on October 1, 2015. On the same date Warner paid $75,000 cash to Acme for 750 shares of its common stock. Simultaneously, Roger received 100 shares of Acme's common stock for services rendered. How much should Roger include as taxable income for 2015, and what will be the basis of her stock? Taxable Income Basis of Stock

Roberta Warner and Sally Roger formed the Acme Corporation on October 1, 2015. On the same date Warner paid $75,000 cash to Acme for 750 shares of its common stock. Simultaneously, Roger received 100 shares of Acme's common stock for services rendered. How much should Roger include as taxable income for 2015, and what will be the basis of her stock?
Taxable Income Basis of Stock

A. 10,000 0
B. 0 0
C. 10,000 10,000
D. 0 10,000

Answer: C

Jose started renting a house to Bill for $600 per month beginning February 1, 2015. Bill paid $1,200 on January 15, 2015, which included one month's rent and one month's security deposit. The rent is due by the 5th of the month. The lease specifies that the security deposit will also be used as the final month's rent. Bill pays the rent on the 2nd of each month. Bill also paid $150 for repairs to the air-conditioning system in July and $80 for a roof repair in September. He deducted the amounts from the rent paid to Jose for those months. Bill was unable to pay December's rent until January of the next year. How much should Jose report as rental income for 2015?

Jose started renting a house to Bill for $600 per month beginning February 1, 2015. Bill paid $1,200 on January 15, 2015, which included one month's rent and one month's security deposit. The rent is due by the 5th of the month. The lease specifies that the security deposit will also be used as the final month's rent. Bill pays the rent on the 2nd of each month. Bill also paid $150 for repairs to the air-conditioning system in July and $80 for a roof repair in September. He deducted the amounts from the rent paid to Jose for those months. Bill was unable to pay December's rent until January of the next year. How much should Jose report as rental income for 2015?

A. 6900
B. 7200
C. 6600
D. 6000

Answer: C

All of the following statements are true except

All of the following statements are true except 

A. A son, age 21, was a full-time student who earned $4,000 from his part-time job. The money was used to buy a car. Even though he earned $4,000, his parents can claim him as a dependent if the other exemption tests were met.
B. For each person claimed as a dependent, the Social Security number, adoption taxpayer identification number, or individual taxpayer identification number must be listed.
C. If a married person files a separate return, (s)he can take an exemption for his or her spouse if the spouse had no gross income and was not the dependent of another taxpayer.
D. A brother-in-law must live with the taxpayer the entire year to be claimed as a dependent even if the other tests are met.

Assuming Mr. Cypress is a cash-basis taxpayer, what amount should Mr. Cypress include in his 2015 gross income from the apartment building?

Assuming Mr. Cypress is a cash-basis taxpayer, what amount should Mr. Cypress include in his 2015 gross income from the apartment building?

A. 35,500
B. 39,500
C. 35,000
D. 38,000

Answer: D

In which of the following situations will a controlled foreign corporation located in Ireland be deemed to have Subpart F income?

In which of the following situations will a controlled foreign corporation located in Ireland be deemed to have Subpart F income?

A. In which of the following situations will a controlled foreign corporation located in Ireland be deemed to have Subpart F income?
B. In which of the following situations will a controlled foreign corporation located in Ireland be deemed to have Subpart F income?
C. B. In which of the following situations will a controlled foreign corporation located in Ireland be deemed to have Subpart F income?
D. B. In which of the following situations will a controlled foreign corporation located in Ireland be deemed to have Subpart F income?

Answer: B

Parker, whose spouse died during the preceding year, has not remarried. Parker maintains a home for a dependent child. What is Parker's most advantageous filing status?

Parker, whose spouse died during the preceding year, has not remarried. Parker maintains a home for a dependent child. What is Parker's most advantageous filing status?

A. Married filing separately.
B. Head of household.
C. Single.
D. Qualifying widow(er) with dependent child.

Answer: D

On February 1, Year 5, Hall learned that he was bequeathed 500 shares of common stock under his father's will. Hall's father had paid $2,500 for the stock in Year 1. Fair market value of the stock on February 1, Year 5, the date of his father's death, was $4,000 and had increased to $5,500 6 months later. The executor of the estate elected the alternate valuation date for estate tax purposes. Hall sold the stock for $4,500 on June 1, Year 5, the date that the executor distributed the stock to him. How much income should Hall include in his Year 5 individual income tax return for the inheritance of the 500 shares of stock that he received from his father's estate?

On February 1, Year 5, Hall learned that he was bequeathed 500 shares of common stock under his father's will. Hall's father had paid $2,500 for the stock in Year 1. Fair market value of the stock on February 1, Year 5, the date of his father's death, was $4,000 and had increased to $5,500 6 months later. The executor of the estate elected the alternate valuation date for estate tax purposes. Hall sold the stock for $4,500 on June 1, Year 5, the date that the executor distributed the stock to him. How much income should Hall include in his Year 5 individual income tax return for the inheritance of the 500 shares of stock that he received from his father's estate?

A. 2500
B. 5500
C. 4000
D. 0

Answer: D

John Budd is single, with no dependents. During 2015, John received wages of $11,000 and state unemployment compensation benefits of $2,000. He had no other source of income. The amount of state unemployment compensation benefits that should be included in John's 2015 adjusted gross income is

John Budd is single, with no dependents. During 2015, John received wages of $11,000 and state unemployment compensation benefits of $2,000. He had no other source of income. The amount of state unemployment compensation benefits that should be included in John's 2015 adjusted gross income is

A. 500
B. 1000
C. 2000
D. 0

Answer: C

During an all-employee awards ceremony, Pedals Company gave Mollie a new bicycle for her outstanding safety record. This award was presented to Mollie for her services to the company and in accordance with Pedals's qualified employee achievement awards program. The bicycle cost Pedals $1,200 and has a fair market value of $1,700. What amount must Mollie include in income?

During an all-employee awards ceremony, Pedals Company gave Mollie a new bicycle for her outstanding safety record. This award was presented to Mollie for her services to the company and in accordance with Pedals's qualified employee achievement awards program. The bicycle cost Pedals $1,200 and has a fair market value of $1,700. What amount must Mollie include in income?

A. 500
B. 1200
C. 0
D. 1700

Answer: C

In February 2015, Paul and Jean, a married couple, cashed a qualified Series EE savings bond they bought in November 2004. They received proceeds of $7,132, representing principal of $5,000 and interest of $2,132. In 2015, they helped pay their daughter's college tuition. The qualified education expenses they paid in 2015 totaled $4,000. They are not claiming an education credit for the expenses, and they do not have an education IRA. How much interest income can Paul and Jean exclude?

In February 2015, Paul and Jean, a married couple, cashed a qualified Series EE savings bond they bought in November 2004. They received proceeds of $7,132, representing principal of $5,000 and interest of $2,132. In 2015, they helped pay their daughter's college tuition. The qualified education expenses they paid in 2015 totaled $4,000. They are not claiming an education credit for the expenses, and they do not have an education IRA. How much interest income can Paul and Jean exclude?

A. 2132
B. 4000
C. 1196
D. 1000

Answer: C

Al and Iris Oran, who are married, received $10,000 in 2015 as dividends from taxable domestic corporations. In the Orans' 2015 joint return, the amount of these dividends subject to tax is

Al and Iris Oran, who are married, received $10,000 in 2015 as dividends from taxable domestic corporations. In the Orans' 2015 joint return, the amount of these dividends subject to tax is

A. 8500
B. 9000
C. 10,000
D. 9900

Answer: C

Smith, a retired corporate executive, earned consulting fees of $8,000 and director's fees of $2,000 in 2015. Smith's gross earnings from self-employment in 2015 was

Smith, a retired corporate executive, earned consulting fees of $8,000 and director's fees of $2,000 in 2015. Smith's gross earnings from self-employment in 2015 was

A. $ 10,000
B. $ 8,000
C. $ 2,000
D. $ 0

Answer: A

Clark bought Series EE U.S. Savings Bonds after 1989. Redemption proceeds will be used for payment of college tuition for Clark's dependent child. One of the conditions that must be met for tax exemption of accumulated interest on these bonds is that the

Clark bought Series EE U.S. Savings Bonds after 1989. Redemption proceeds will be used for payment of college tuition for Clark's dependent child. One of the conditions that must be met for tax exemption of accumulated interest on these bonds is that the

A. Bonds must be bought by the owner of the bonds before the owner reaches the age of 24.
B. Purchaser of the bonds must be the sole owner of the bonds (or joint owner with his or her spouse).
C. Bonds must be transferred to the college for redemption by the college rather than by the owner of the bonds.
D. Bonds must be bought by a parent (or both parents) and put in the name of the dependent child.

Answer: B