41.A. Not a Tax.B. Not a Tax
Chapter 1
Check Figures
41.a. not a tax.b. not a tax.
c. not a tax.d. a tax.
e. not a tax
42.a. not a tax.b. a tax.
c. not a tax.d. a tax.
e. not a tax.
43.a. tax = $18,360b. 28%
c. 20.86%d. 18.73%
44.a. tax = $20,320b. tax = $16,125
c. tax = $20,550
45.Rory = $4,590; Latisha = $8,362
46.a. proportionalb. proportional
c. progressived. regressive
47income tax - progressive
sausage tax - proportional
property tax - regressive.
48.a. $918b. $174
49.a. $7,382b. $8,126
50.Clinton-$4,896; Tranh-$8,362
51.$16,578
52.Darrell-$8,246; Whitney-$16,491
53.a. ordinary incomeb. ordinary income
c. gaind. exclusion
e. ordinary income
54.a. ordinary incomeb. ordinary income
c. gaind. ordinary income
e. exclusion
55.a. related to a businessb. related to a business
c. personal use assetd. capital expenditure
e. personal expense
56.a. loss of $1,700b. deductible expense
c. nondeductible expensed. nondeductible capital expenditure
e. deductible expense.
57.taxable income = $87,000; tax $18,080.00
58.taxable income = $79,800; tax $12,325.00
59.taxable income (from AGI) is greater by $3,600
60.N/A
61.Saul's tax = $465
622009 and 2010 marginal tax rates; time value of money
63.net savings from 2010 deduction = $256
64.15.0% = 4.89%
25.0% = 4.31%
28.0% = 4.14%
33.0% = 3.85%
65.a. taxable income = $149,350b. tax savings = $2,904
66.a. taxable income = $100,850b. tax savings = $4,558
67.a. evasionb. evasion
c. evasiond. avoidance
e. avoidance
68.a. evasionb. not evasion
c. not evasiond. not evasion
e. evasion
Chapter 2
Check Figures
18.a. not ability to payb. possibly based on ability to pay
c. not ability to payd. not ability to pay
19.a. not ability to payb. not ability to pay
c. not ability to payd. not ability to pay
20.Single tax = $18,920; Married tax = $14,875
21.marital status, deductions, dependents, tax credits
22.a. related partyb. related party
c. related partyd. not related parties
e. not related parties
23.a. not related partiesb. not related parties
c. related partyd. related party
24.Related parties, Nall cannot deduct the loss.
25.a. business incomeb. interest must be allocated
c. capital expenditured. electricity must be allocated
e. bad checks not incomef. fully deductible
g. fully deductibleh. not deductible
26.a. $4,000 business expense; $9,200 itemized deduction
b. property tax must be allocated
c. electricity must be allocated
d. not deductible; add to basis of house
e. $30 per month deductible; $250 ad deductible
f. cost of operating van must be allocated
27.a. no tax paidb. $ 40,000 taxable income
c. $100,000 taxable incomed. $ 60,000 taxable income
28.a. Wendy’s taxable income = $8,000b. Wendy’s taxable income = $18,000
29.Using 2 separate S corporations will not reduce tax
30.2008 taxable income = $30,000; 2009 taxable loss = $10,000
31.Arnie is taxed on the $10,000
32.$2,000 taxable to Esmeralda
33.a. cash basis in 2010accrual basis in 2009
b. cash basis = $22,450accrual basis = $23,010
c. cash basis in 2010accrual basis in 2009
d. cash basis - as payments receivedaccrual basis in 2009
e. capital expenditure
34.a. cash basis in 2010accrual basis in 2009
b. capital expenditure
c. cash basis - as payments receivedaccrual basis - in year of sale
d. cash basis - no income recognizedaccrual basis - in 2009
35$600 income in 2009
36.$600 income in 2009 no deduction; $600 income in 2009
37.Parents cannot deduct interest paid
38.a. realization conceptb. pay-as-you-go concept
c. administrative convenience conceptd. administrative convenience concept
39.a. pay-as-you-go conceptb. tax benefit rule
c. assignment of income doctrined. entity concept; conduit entity
40.$31,600 gain on sale
41.2009 tax liability = $19,920
42.$18,000 realized loss; $3,000 deductible loss
43a. $15,000 realizationb. $39,000 realization
c. no realizationd. $30,000 realization
44.a. no realizationb. realization
c. realizationd. realization
45.$30,000 of income
46.a. claim of rightb. no claim of right
c. claim of rightd. claim of right
47.a. claim of rightb. claim of right to $20,000
c. claim of rightd. claim of right
48.constructive receipt doctrine
49.a. no constructive receiptb. $75 per month constructive receipt
c. $1,500 constructive receipt
50.a. realizationb. no realization
c. realizationd. realization
e. $1,000,000 realization
51.N/A
52.a. assignment of income doctrineb. wherewithal-to-pay concept
c. claim of right doctrined. all-inclusive income concept
53.allocation of costs between different uses
54.a. legislative graceb. business purpose concept
c. business purpose conceptd. legislative grace concept
55.a. legislative grace conceptb. business purpose concept
c. capital recovery conceptd. business purpose concept; capital recovery
56.cost of trip not deductible
57.a. personal expenseb. trade or business expense
c. production of income (investment) expense
58.a. personal loss not deductibleb. trade or business loss deductible
c. investment loss maximum deductible loss $3,000
59.a. $2,000b. $15,000
60.a. capitalize land, utility, sewer lineb. capital expenditure; $2,292 deductible
c. capitalize purchase priced. deduct supplies cost
painting and repair
61.a. basis per share=$15b. $271,700
c. $35,000d. zero basis
62.a. deduct actual expendituresb. deduct actual expenditures
Chapter 3
Check Figures
30.a. Realized Incomeb. No Recognition
31.$20,000 income
32.$1,000 income
33.$6,000 income
34.a. $90,000 incomeb. $27,000 income
35.a. Jason is taxedb. Erica is taxed
36.a. Frank $200; Dorothy $600b. Frank recognizes the income
c. Frank recognizes income
37.a. Camille $15,000; CAM Rental $21,000b. Jimbob is taxed
c. Both Jimbob and Joebob are taxed
38.a. Patz $1,500; Tucky’s Accessories $1,500
b. Geraldo $2,200 income from sale; $100 income from exchange
39.$2,100 gross income
40.a. $700 gross income
b. Capital recovery deduction $24,000; gross income $3,500
c. $7,150 gross income
41.a. $152b. $1,824
c. $1,216 gross income; $5,016 deduction
42.a. $4,200 gross incomeb. $2,800 gross income
c. $4,200 gross income
43.$296,000 gain
44.$15,000 gain
45.Additional income $150
46.a. Julius $15,000b. Felix $3,000
c. Andrea $47,000d. Maryanne $150,000
e. Maryanne loss $30,000
47.a. $106,000b. $130,000
48.Taxed on FMV - $30,000
49.a. $200b. $0 if qualified plan; $200 if no qualified plan
c. $1,400d. $10,000
50.a. Charlotte: $3,000 in Dec.;b. $500 in 2008
Joe: $3,000 in Jan.
c. Bonus income, Jan.d. $64,000 income
51.a. $6,000 gross incomeb. $19,500 gross income
c. $49,500 gross income
52.a. $35,000 gross incomeb. $49,500 gross income
53.N/A
54.Recapture rules apply
55.$500 alimony taxable to Will; deductible by Janine
56.Property settlements not taxable; $190,000 dividend to Raphael
57.a. Nob. No
c. Yesd. Yes
e. Yes
58.a. No tax effects
b. Laura $800 interest income and $800 deduction;
George $800 income and $800 interest expense
c. Laura $6,000 interest income; Father $6,000 interest expense
d. Laura $5,600 interest income, Lotta Inc. $5,600 interest expense
59.a. No interest income or interest expense recognized
b. Wilton $1,800 interest income; Andy $1,800 interest expense
c. Wilton $4,500 interest income and $4,500 deduction;
Andy $4,500 income and $4,500 interest expense
d. Andy $4,500 dividend income and $4,500 interest expense; Wilton Corp. $4,500 income
60.a. No incomeb. Taxable income of $600 if not repaid
c. $1,100 taxable to PLCd. Gain on sale $4,350
61.$6,600
62.Azi $3,500 gain
63.a. No income recognizedb. Chuck dividend income $20,000
c. Gerry $400 incomed. $800 if no plan; $0 if qualified plan
e. Anna $1,000 incomef. Terry $100 income
64.Net long term gain $1,600
65.Tax on capital gains $3,230
66.Tax on capital gains $2,430
67.Tax on capital gains $5,640
68.Taxable income $120,650; tax liability $19,038
69.Tax liability $13,125
70.Tax liability $3,365
71.$(3,000) loss deduction
72.Net short-term capital loss $300
73.Increase in taxable income, $5,000
74.Lorenzo
Business Income$30,300
Long-term Capital Gain$ 6,600
Short-term Capital Loss$ (1,200)
75.a. $36,000 dividend income
b. $140,000 ordinary income; $50,000 long term capital gain
76.Emma $18,000 ordinary loss deduction; Chloe $12,000 ordinary loss deduction
77.a. $200 lossb. $6,000 income
78.Accrual $20,000; Hybrid $17,000
79.a. $180,000b. $210,000
80.a. No interest incomeb. No interest income
c. Interest income $134
81.Interest Income 2009 - $500; 2010 - $550; 2011 - $600; Savings bond $800 in 2011
82.Gross income $22,000
83.a. $40,000 next yearb. $1,500 income Dec.
c. $22,000 income Dec.d. $5,000 income Dec.
84.a. $2,175b. $0
c. $1,200d. $8,400
85.a. $35,000b. 2008 - $14,000; 2009 - $5,250
86.a. $6,750 gainb. recognize entire amount;
capital loss = $1,000
87.$2,000,000
88.$300,000
Chapter 4
Check Figures
20.a. Savings $560b. Savings $560
c. Tax Credit $200d. Savings $142
21.Excludable Gift
22.Raisa $150 interest June 30; $450 interest Dec 31; Lenia $300 taxable
23.a. Rory $7,000 gross income; Tabitha $1,000 dividend
b. Rory taxed $5,500
24.$10,000 capital gain; $2,200 dividend income
25.$2,400 rental income
26.Exclude $100,000; include $20,000 of each payment in income
27.$7,000 income
28.$2,000 of income
29.a. Scholarship excludedb. Not a scholarship; income
30.a. No realized incomeb. Realized income $1,000 less basis
c. Compensation realizedd. Insurance excluded
31.$6,600 gross income; daughter $4,000 income
32.$1,600 + $1,100 + $5,000 + $250,000 taxable; $120,000 excludable
33.Tax credit saves $640
34.Both options result in no tax liability
35.a. $1,000 per month incomeb. all excluded
36.$21,150 gross income
37.Life insurance proceeds excluded; death benefit payments taxable
38a. No gross incomeb. Gross income $24.48
c. Gross income $269.28d. Gross income $234
39.a. $1,900 gross incomeb. No gross income
40.a. Excluded from gross incomeb. $2,400 gross income
41.Adjusted gross income decreases $2,400
42.$9,974
43.Groceries taxable
44.Yes
45.a. $60 excluded; $90 includedb. Licensing fees, membership excluded; $750 income
c. $2,200 gross incomed. Fully excludable
46.a. No income
b. $720 gross income
c. all employees - excluded, if only some employees - $720 included
47.$89,288
48.$154,595
49.$39,748
50.$800 gross income
51.a. $2,000,000 gross incomeb. $50,000 gross income
c. $370,000 gross income
52.Employer payments- substitute income; Workers comp - recovery of capital
53.$9,800 gross income
54.a. Exclude $960b. Exclude
c. $1,900 gross incomed. $800 gross income
55.Gross income $620
56.Exclude $2,400 interest; $4,000 capital loss
57.a. $600 gain on saleb. No gross income
c. $950 gross income; $500 loss on sale
58.greater than 6.15%
59.Sell bonds - $67 more after-tax income
60.a. $100,000 gross incomeb. No gross income
c. $ 75,000 gross income
61.a. $10,000 gross incomeb. Exclude $30,000
c. Exclude $20,000
62.a. Gift-not taxedb. Recognize $10,000
c. No forgiveness; reduce basis by $40,000
63.a. $20,000 gross incomeb. Exclude $120,000; recognize $100,000
c. $30,000 gross income
64.No income from return of property
65.$1,000 gross income; $12,000 rental reduction capitalized
Chapter 5
Check Figures
26.a. Susan - expenses deductible for AGIb. Alexandra - Misc. itemized deduction
27.a. Add to basisb. $2,000 deductible for AGI
c. Misc. itemized deductiond. Misc. itemized deduction
e. Deducted for AGI - $4,000 rental income
28.a. Fully deductible for AGIb. Itemized deduction
c. Not deductibled. Itemized deduction
e. Misc. itemized deductionf. Golf cart - not deductible
Advertisement is deductible
29.Each partner: Ordinary income $80,000; ST capital gain $8,000
ST capital loss $4,000; Investment expense $2,000
30.a. Manuel: Taxable ordinary income $112,000; LT capital gain $5,600
ST capital loss $10,500; Charitable contribution $6,300
Non deductible expenses $2,800
b. Taxable income: $77,100
31.Not a trade or business
32.Deductible for AGI
33.Not deductible
34.Net rental income $870
35.a. Mixed use asset - $2,660 businessb. business portion $630 gain
36.Yes, if reasonable in amount
37.a. $4,000 not ordinary or reasonableb. Yes
c. Yesd. Not ordinary
38.a. $200 ordinary, necessary - bonus not deductible not ordinary
b. Not necessary
c. Rent - ordinary, necessary
d. Ordinary, necessary
39. a. Capitalb. Capital
c. Repair expensed. Capital
e. Repair expense
40.Open – amortize ($5,800); Don’t open - nondeductible
41.a. Deductb. Related - deductible
c. Open – amortize ($5,667); Don’t open - nondeductible
42.a. Not deductibleb. Not deductible
c. $1,725 gross income
43.a. Not deductibleb. Not deductible
c. Not deductibled. Not deductible
44.a. Not deductibleb. Not deductible
c. Deductibled. Deductible
e. Deductible if total for year is $1,800
45.Local - deductible; State - nondeductible
46.$640 not deductible
47.$200 not deductible
48.Ordinary income $67,500; Taxable interest and dividends $7,500
Tax exempt interest $1,850; Investment interest $1,364
Nondeductible expenses $336
49.a. $220 not deductibleb. Deductible - business purpose exists
50.a. Not deductible – not ordinaryb. Not deductible – not taxpayer’s expense
51.a. Misc. itemized deduction $5,600b. Misc. itemized deduction $8,000
before 2% of AGI before 2% of AGI
c. Part a net income effect $3,400
Part b net income effect $1,000
52.a. Net loss from business $1,620b. Misc. itemized deduction $10,430
c. Nine factors (see page 193-194 text)
53.a. Income from rental - $0; balance of income limited to $1,230
54.a. Income form rental $0; balance of income limited to $500
b. Income not reported; expenses not deducted; interest and taxes itemized deduction
55. Case A - net rental loss $2,950Case B - Net rental loss $0
Case C - No income reportedCase D - Net rental loss $4,654
56.a. Income not reportedb. Net rental income $0
interest and taxes itemized deduction
c. Net rental income $8,921
57.Net profit $22,150
58.a. Home office costs $5,843b. No deduction
59.a. Home office costs limited to $3,000; $1,105 carryforward
60.Deduct $565,000
61.a. Deduct $1,500 in 2008b. Deduct $1,500 in 2008
c. Deduct $0 in 2008
62.$52,500 deduction
63.Deduct $9,950
64.Deduct $78,300
65.2008 - $2,750; 2009 - $5,500
66.a. accrual $1,500 in 2008; cash $2,250 in 2009
b. accrual $1,550 in 2008; cash $1,550 in 2008
c. accrual $20,000 in 2008; cash $20,000 in 2009
d. accrual $2,400 in 2008; cash $2,400 in 2009
e. accrual $700 in 2008; cash $700 in 2008
67.a. accrual $5,000 in 2008; cash $5,000 in 2008
b. accrual $40,000 in 2008; cash $40,000 in 2008
c. accrual $9,375 in 2008; cash $22,500 in 2009
d. accrual $16,500 in 2008; cash $15,700 in 2008
e. accrual $3,200 in 2008; cash $3,200 in 2008
68.Related parties deduct in 2009; cash basis deduct in 2009
69.Related parties deduct in 2009; accrual deduct in 2008
70.Deduct financial $50,000; tax $0
71.Deduct financial $180,000; tax $149,000
Chapter 6
Check Figures
26.$312
27.$0; $81.50
28.$0 - no business purpose
29.a. $2,600b. No deduction
c. No deductiond. No deduction
30.a. No deductionb. No deduction
c. $2,000d. No deduction
31.N/A
32.a. N/Ab. $6,706
33.a. N/Ab. $5,606
34.$7,496 actual cost deduction; $7,815 standard mileage method
plus $900 of interestplus $900 of interest
35.a. $7,865 standard mileage deductionb. $8,717 actual cost deduction
plus $320 of Interest plus $320 of Interest
36.65% is deductible
37.a. $1,355b. $440
c. $1,255
38.a. $1,261b. $538
c. wife’s expenses nondeductible
39.Only business portion deductible (2 days)
40.Ester: $1,108; Marisa: $0
41.$493
42.$2,600a. $2,150
43.a. $25,800 deductibleb. $350 deductible
c. Maybe depends on AGId. $2,200 deductible
44.$825 deduction
45.Publicly held: $1,000,000; Closely held: $1,100,000 deduction
46.6th highest paid: $1,320,000; 3rd highest paid: $1,000,000 deduction
47.a. Current year bad debt $500b. $5,300 deductible in year exact amount
c. Income of $100 known
48.$3,900 bad debt; $1,400 reported as income
49.a. $8,000 deductibleb. No deduction
50.a. Business debtb. Deduct business and nonbusiness bad debt
51.a. $3,700,000b. $192,000c. $95,000
52a. $185,000b. $11,100c. $11,100
53.a. $7,375b. $8,375
54.a. No deductionb. No deduction
c. $500 deductiond. No deduction
55.a. No deduction; add to basisb. Deductible
c. No deductiond. No deduction
56.Gain on sale $18,500
57.$21,260
58.Deductible
59.a. Capitalize $40,000b. Deductible $12,000
c. Deductible $5,000d. Not deductible $500
e. Deductible $2,500
60.Deduct $8,000 alimony;
61.Deduct $2,000 alimony
62.a. Total itemized deduction $1,575b. Total itemized deduction $5,250
63.a. 1. Misc. itemized deduction $825; 2. No income or deduction; 3. $1,000 income
b. $8,250 misc. itemized deduction
c. Deductible for AGI
64.N/A
65.a. $3,100 for AGIb. $3,886
66.a. $2,200 for AGIb. $8,336
c. $2,200 itemized
67.a. Deduction $10,000b. Deduction $10,000
c. Deduction $6,600 ($3,600 + $3,000)d. Deduction $8,000 ($5,000 + $3,000)
68.a. Deduct $10,000b. Deduct $3,500 ($1,750 each)
c. Deduct $5,000
69.Max contribution $5,000
70.a. $5,000b. $4,000
c. No contribution allowedd. $2,000
71.a. $11,000b. K- $5,400; J - $4,500
c. K - $1,200; J - $1,000d. Kevin: a. - $0, b. - $600 (IRA)
Jill: a. - $4,500, b. - $ -0- (IRA)
72.a. $2,000 each childb. $800 each child
73.$500 each child
74.a. $1,500 for AGIb. $4,000 for AGI;
c. -0-d. $2,000 for AGI
75.a. $1,800b. $2,500
c. $1,200
76.a. $1,400b. $280
77.$2,555
78.a. $3,040b. $356 additional tax liability
Chapter 7
Check Figures
17.$9,000 carryforward to 2010
18.$44,500 tax refund
19.carryforward loss - $7,267 greater savings
20.a. $90,000b. $67,000
21.Ending amount at-risk - $16,000
22.Loss limited to at-risk - $16,000
23.a. $30,000b. no effect
24.a. $14,000b. $31,000
c. $49,000d. $14,000
e. $24,000
25.a. $72,000b. $45,000
c. $47,000
26.a. Yesb. No
c. Nod. No
e. Nof. Yes
27.a. Yesb. No
c. Nod. Yes
e. Nof. Yes
28.a. 2008 – At-risk $0; $1,000 suspended at-risk rules
b. 2008 – At risk $0; $20,000 suspended passive loss rules
c. 2008 – Allowable loss $3,800; $1,000 suspended at-risk rules
29.Betina $9,600; Aretha $0a. Betina $9,600; Aretha $2,500
b. Betina $9,600; Aretha $14,400
30. $18,500
a. $16,000b. $16,000
c. $16,000
31.a. 2008 - $102,000; 2009 - $120,000; 2010 - $96,000
b. 2008 - $105,000; 2009 - $135,000; 2010 - $78,000
32.a. 2008 - $97,000; 2009 - $115,000; 2010 - $97,000
b. 2008 - $97,500; 2009 - $130,500; 2010 - $81,000
33.a. $15,000 deductionb. $0
c. $14,000 deductiond. $5,500 deduction
34.a. $12,900 deductionb. $10,500 deduction
c. $0d. $12,900 deduction
35.a. No effectb. PA2 - $10,000
36.a. No effectc. PA2 - $7,200
37.No deduction in any year
38.a. $12,000 long-term capital gainb. $5,000 long-term capital loss
39.a. $ 7,000 capital gainb. $ 5,000 capital loss
$16,000 suspended loss deduction $16,000 suspended loss deduction
40.$9,000 deduction
41.No suspended loss allowed
42.No effect; Felipe’s basis is $46,000
43.a. $1,000 increaseb. $6,000 capital loss;
$13,000 suspended loss deduction
c. $5,000 decreased. No effect
e. No effect
44.N/A
45.a. $135,000 ordinary lossb. $27,000 casualty loss
c. $3,100 lossd. $0 casualty loss
e. $37,300 loss
46.a. $900 lossb. $8,500 ordinary loss
c. $22,000 casualty lossd. $700 income
e. $5,500f. $10,000 casualty loss
g. $2,050
47.$3,800 lossb. $400 gain
48.$1,300 lossb. $4,800 loss
49.$1,850 total loss
50.$3,820 loss
51.a. $70,500b. $63,500
52.$5,000 carryforward
a. $2,500 deductionb. $3,000 deduction; $6,000 carryforward
53.$15,000 carryforward
a. $12,000 carryforwardb. $4,100 carryforward
54.a. $17,000 loss carrybackb. $4,500 capital gain; $8,750 capital loss
55.2009 carryback generates $2,040 refund
56.2009 carryback generates $2,040 refund; $3,000 carryforward to 2010
57.$52,000 loss carryforward
a. $50,000 ordinary loss, b. $55,000 ordinary loss
$3,000 capital loss
58.$22,000 loss carryforward
a. $10,000 loss carryforwardb. $3,000 loss carryforward
59.$17,000 business loss; $3,000 capital loss deduction
60.Katelyn: $2,400 loss disallowed
a. Jon: no gain recognizedb. Jon: $200 recognized gain
c. Jon: $500 recognized loss
61.Elliot: $2,000 loss disallowed; Nancy: $1,000 gain recognized
a. Nancy: No recognized gain
b. Nancy: $2,000 recognized loss
62.$30,000 disallowed loss; $50,000 dividend income
63.$8,000 disallowed loss; $2,167 realized loss; $1,167 realized gain
64.$1,500 recognized loss
65.$367 recognized loss
66.$1,400 casualty loss
67.$4,900 casualty loss
68.a. $45,000 loss; $ 9,000 lossb. $9,000 loss; $3,900 loss
c. $70,000 gain; $6,900 loss
69.$28,000 business gain; $3,600 personal casualty loss
70.$8,000 business loss; $900 personal casualty loss ($0 deductible)
71.$600 loss carryforward
72.$2,500 long-term capital loss
Chapter 8
Check Figures
30.a. Dependentb. Not a dependent
c. Not a dependentd. Dependent
31.a. Dependentb. Dependent
c. Not a dependentd. Dependent
e. Dependent
32.a. Married filing jointly or filing separatelyb. Single
c. Head of householdd. Head of household
e. Singlef. Surviving spouse
33.a. Marriedb. Single
c. Head of householdd. Surviving spouse
e. Head of household
34.a. $6,400b. $13,200
c. $12,500c. $8,350
e. $12,500f. $11,500
35.a. $6,200b. $13,600
c. $8,400d. $ 5,800
e. $9,750f. $13,600
36.a. $68,850; $13,400 tax$500 refund
c. $95,200 taxable income; $16,175 tax; $925 refund
37.a. $62,150b. $8,488; $6,488 after credit
c. $212 refund
38.a. $370b. $0
39.$2,815
40.a. $3,855b. $4,023
41.$5,645
42.a. No effectb. $145 income
c. $50 income
43.a. No effectb. $465 income
c. $200 income
44.a. $63,489b. $1,489 - Rocco
c. $81,489
45.a. $6,940b. $6,670
46.a. $12,800b. $10,439
47. $9,533
48.$77,000
49.Car loan from dealer
50.a. $2,900; $10,225 carryforwardb. $2,900; $10,225 carryforward
51.2008 - $3,200; $4,900 carryforward2009 - $2,900; $6,375 carryforward
52.a. $10,200b. $10,000
c. $9,500
53.a. $32,000b. $54,000 if long-term gain property
c. $30,000; $18,000
54.a. $100b. $0
c. $42d. $18,000
55.Property with basis of $32,000
56.a. $1,810b. $5,470
57.$755
58.$1,175
59.$700
60.$2,100
61.a. $161,595b. $522,800
62.a. $138,695b. $219,155
63.a. $200b. $400
c. $400d. $1,100
e. $0f. $1,400
64a. $20b. $20
c. $25d. $62
e. $0f. $208
65.a. $8,688; $512 tax refundb. $6,665; $310 refund
c. $7,353; $247 tax refundd. Joint: $9,875; $625 refund
66.$2,000a. $1,600b. $1,000
67.$1,000a. $2,000b. $1,650
68.$950 refund; $1,838 refund
69.a. $387b. $2,917
c. $0d. $4,680
70.a. $391b. $2,552
c. $4,132d. $3,964
71.a. $600b. $630
c. $560d. $880
e. $600
72.a. $420b. $870
c. $1,200d. $800
e. $0f. $600
73.a. $2,208b. $0
74.a. $4,440b. $2,886
c. $3,800
75.a. $1,000
76.a. Does not need to fileb. Must file
c. Must filed. Does not need to file
e. Must file
77.a. Must fileb. Does not need to file
c. Must filed. Must file
e. Must file
Chapter 9
Check Figures
20.a. Personal use property & personal propertyb. Personal property
c. Real property and personal propertyd. Intangible property
e. Real propertyf. Personal property
21.a. Personal propertyb. Personal-use real property
c. Intangible propertyd. Real property
e. Personal propertyf. Personal-use personal property
22.a. Business basis = $18,291; personal-use basis = $7,500
b. Building = $187,380; Land = $80,000; Land Improvements = $11,000
23.a. $21,000b. $5,530
c. $35,000
24.$3,500
25.Adjusted basis = $39 per share
26.Gain = $27,500
27.$6,000 Gain
28.a. Increase basisb. Increase basis
c. Decrease basisd. No effect
29.Adjusted basis - $85,800
30.a. Amos' basis = $50,000; Thomas' basis = $25,000
b. Amos' basis = $70,000; Thomas' basis = $35,000
31.Amos' basis = $34,500
32.$66,000
33.a. $99,400
b. Gain if sales price is greater than adjusted basis
Loss if sales price is less than adjusted basis.
34.a. Initial basis $45,900; 2009 - $47,200b. $23,600
35.$21,590
36.$285,000
37.Tractor's basis = $78,000; Trailer's basis = $30,000
38.a. $60,748b. $40,748
c. $60,000 basis; $40,000 gain
39.$40,000; Income of $12,000
40.Nondeductible loss of $3,000 on sale
41.$107,950
42.Land = $50,000; Building = $200,000 or Land = $17,500; Building = $232,500
43.a. Use fair market values and have goodwill of $30,000
b. Basis in stock - $250,000
44.a. Inventory = $18,000; Machinery = $8,000; Land = $10,000; Building = $4,000
b. Goodwill $10,000
c. Basis in stock - $60,000
45.$201,000
45.$535,000
47.a. $10,000b. $2,300 Gain
48.a. $220,000 realized gainb. $10,000 realized loss
- No gain or loss realized
49.a. $10 lossb. $25 gain
c. No gain or loss
50.a. Sell or gift the sharesb. Stockton should sell the shares
51.Giving the shares to Eunice will save $276.
52.Sell the shares
53.a. Gain basis = $25,000;b. $9,000
Loss basis = $9,000
54.a. $1,400 lossb. $1,600 gain
c. No gain or loss
55.a. Gain basis - $300,000; loss basis - $250,000b. Depreciable basis - $250,000
c. Carryover basis, carryover holding period
FMV uses gift date
56.a. $10,000 gainb. $10,000 loss
c. No gain or loss
57.a. Cannot use the alternative valuation dateb. Primary valuation date basis = $200,000;
58.a. $30,500b. $25,500
c. Land = $17,000; Stock = $12,000d. $25,500
Watch = $500
59.a. $12 per shareb. $10 per share
c. $18 per share
60.Assuming no estate tax, hold the securities until Phong dies.
61.Sell the securities.
62.$80,000 ($72,000 personal use; $8,000 business use)
63.Gain basis $55,900; loss basis $30,900
64.a. $16,000 gain basis; $10,000 loss basisb. $2,000 loss
65.a. 2008: dividend income of $520; 2009: capital gain of $2,000
b. $920 gain
66.Common: $4,687; Preferred: $313
67.$40 of dividend income
68.Basis of reacquired stock - $2,733; Recognized loss - $217
69.a. Loss is disallowed.b. $2,400 capital loss; $1,600 disallowed loss
c. Loss is disallowed.
70.Delay repurchase for 30-days and recognize $1,000 loss.
Chapter 10
Check Figures
21.a. Not depreciableb. Amortize
c. Depreciabled. Amortize
e. Not depreciablef. Not depreciable
g. Depreciableh. Depreciable
i. Not depreciablej. Business portion is depreciable
22.a. Repairb. Repair
c. Repaird. Repair
e. Repair (not deductible - personal)
23.a. Capitalizeb. Repair
c. Repaird. Repair
e. Repair
24.a. Use Sec. 179 if businessb. Use Sec. 179
c. Sec. 179 flows through to ownerd. Sec. 179 flows through to owner
25.a. $128,000b. Lost forever
c. $407,000
26.a. $115,000b. $433,000
27.a. $12,000b. $5,000
28.a. $26,000b. $44,000
29.a. $55,000b. $26,000 / $35,000
30.$133,257
31.a. $8,000b. $320,000 - building
c. $500d. $700
32.a. $45,000b. $7,000
c. $13,000d. $25,000
33.a. 18, 10, 18b. 6, 5, 5
c. 3, 5, 5d. 5, 5, 5
e. 10, 7, 10 or 10, 3, 10f. 15, 7, 15 or 25, 20, 25
g. 10, 7, 10h. 20, 15, 20
34.a. 10, 7, 10b. 10, 7, 10
c. 6, 5, 6d. 4, 5, 5
e. None, 7, 12f. None, 7, 12
g. None, 3, 12h. 6, 5, 6
35.a. A10-2, 7, mid-yearb. A10-2 ,7, mid-year
c. A10-2, 5, mid-yeard. A10-2 ,5, mid-year
e. A10-2, 7, mid-yearf. A10-2 ,7, mid-year
g. A10-2, 3, mid-yearh. A10-2 ,5, mid-year
36.a. A10-2, 5, mid-yearb. A10-7, 27.5, mid-month
c. A10-9, 39, mid-monthd. A10-2, 5, mid-year
e. A10-9, 39, mid-monthf. A10-2, 20, mid-year
37.$164,333
38.$1,176 gain
39.$23,040 adjusted basis
40.$29,070 adjusted basis
41.a. $156,659b. $11,748
42. a. $8,000b. $8,572 or $8,000
43.a. $147,332b. Use ADS straight-line or MACRS
44.a. $125,000b. $173,000; $240,000
c. $197,722
45.$163,372
46.$141,459
47.a. Mid-quarter convention required, $13,000b. Elect to expense, $140,400 cost recovery
48.a. $6,262 gainb. $110,900 loss
49.a. Year 1: $141,400; $14,578; $17,500b. N/A
50.a. Year 1: $143,146; $10,200; $14,566b. N/A
51.MACRS:Yr. 1 - $14,290; Yr. 2 - $24,490
ADS:Yr. 1 - $7, 150; Yr. 2 - $14,290
52.a. $8,600b. $6,955
53.a. $12,570b. $10,149
54.a. $143,265b. $125,085
c. $98,500d. $39,494
55.a. $154,620b. $2,567
c. $270,538 gaind. $36,006 gain
56.$1,973
57.$2,220
58.a. $30,000; $210,000b. $35,000; $205,000
c. $30,000
59.a. $6,667b. $112,223 or $97,500 gain
c. Use cost depletion; accept if need cash
60.$159,722 depreciation; $4,440 amortization; $3,305 patent
61.Equipment - $30,000
Building - $2,183
Goodwill - 4,000
Patent - $667
Covenant - $889
62.a. $900b. $3,300
Chapter 11
Check Figures
22.a. Amount realized - $25,100b. Amount realized - $199,000
c. Amount realized - $46,000d. Amount realized - $102,000
23.a. Amount realized - $4,420b. Amount realized - $170,000
c. Amount realized - $610,000d. Amount realized - $250,000; $300,000
24.Amount realized- $139,950
25.a. Recognized loss $3,250b. Carrie recognized loss $0
c. Recognized loss $0d. Realized gain $20,000
26.a. Recognized gain $300b. Recognized loss $0
c. Recognized gain $0d. Recognized gain $0
27.James: Recognized gain $1,800
DeWayne: Recognized gain $5,900
28.a. Jared Partnership pays Elvira $40,000b. Jared’s gross selling price - $250,000