ACCT 429 Week 2 Quiz

 ACCT 429 Week 2 Quiz | Devry University

Question 1

 (CO 4) Which of the following is not a trade or business expense?  

A.      Property taxes on business property  

B.      Salary paid to employees  

C.      Penalty paid for a late filing of a sales tax return  

D.      Insurance on business property

Question 2

 (COs 4 and 5) Jenson Company, an accrual basis taxpayer, paid salaries of $125,000 in 2017 and had a salary payable of $20,000 at the end of 2017. The salary of $20,000 owed to employees at the end of 2017 was paid in 2018. What should be the amount of the deduction for salary expense in 2017 and 2018?

A.      $145,000 in 2017 and $0 in 2018  

B.      $125,000 in 2017 and $0 in 2018  

C.      $125,000 in 2017 and $20,000 in 2018  

D.      $20,000 in 2017 and $0 in 2018

Question 3

 (CO 4) John operates an illegal business and incurred the following expenses:

A.      Salaries expense                      $50,000

B.      Bribes to public officials              10,000

C.      Cost of goods sold                     17,000

D.      Rent expense                            20,000

What would be the amount that reduces John’s taxable income?  

A.      $50,000  

B.      $60,000  

C.      $87,000  

D.      $97,000

Question 4

 (CO 4) Mac Corporation, a computer maker, donated computers to a qualified educational institution. The computers were manufactured by Mac and the educational institution will use the computers for research and research training. Mac’s basis in the computers is $40,000, and the fair market value is $75,000. What is the amount of Mac’s tax deduction for the computers? Ignore the taxable income limitation.

A.      $40,000   

B.      $57,500  

C.      $75,000  

D.      $80,000

Chapter 5. The amount of tax deduction for contributions of inventory by a corporation to a qualified educational organization for the purpose of research or research training is equal to the lesser of (1) the sum of the property’s basis plus 50% of the appreciation on the property or (2) twice the property’s basis.

Question 5

 (CO 4) Jane files a tax return as a single taxpayer. She had the following items in 2018:

Salary of $80,000

Interest income of $2,000

Loss of $70,000 on the sale of Section 1244 acquired 2 years ago

What should be Jane’s AGI for 2018?  

A.      $82,000  

B.      $70,000  

C.      $12,000  

D.      $32,000

Question 6

 (COs 4 and 5)Tonya had the following items for last year:

Salary    $40,000

Short-term capital gain  $12,000

Nonbusiness bad debt  ($10,000)

Long-term capital loss    ($8,000)

For the current year, Tonya had the following items:

Salary    $45,000

Collection of last year’s bad debt              $12,000

Determine Tonya's adjusted gross income for the current year.

For the current year,Tony's  had the following Items:

 Salary = 45000

Collection of last year %  2019 Adjusted  bad debt 25,000

Tonya's 2019s adjusted gross income for the current year

Salary =$ 45000

Income Under tax Benefit rule =$23000

Long term capital loss carry over =-2000

 AGI $66000

Income on collection of nonbusiness bad debt (classified as STCL) to the extent of tax benefit in the  prior year ($ 20000 offset against capital gain and $ 3000 offset against Ordinary Income). $ 23,000

Therefore, Tonya's adjusted gross income for the current year = $ 23,000

Salary

$45,000

Income under tax benefit rule

$10,000

Long-term capital loss carryover

($3,000)

AGI

$52,000