CHAPTER 7 TB

50. Which of the following is not a taxpayer filing status for purposes of determining the appropriate tax rateschedule?A. Head of HouseholdB. Qualifying Widow or WidowerC. Married Filing SeparatelyD. SingleE. All of these are taxpayer filing statuses

51. The taxable income levels in the married filing jointly tax rate schedule are _______ those in the marriedfiling separately schedule.A. the same asB. doubleC. half the amount ofD. none of these

52. Linda is a qualifying widow in 2012. In 2012, she reported $75,000 of taxable income (all ordinary).What is her gross tax liability using the tax rate schedules?A. $10,810B. $14,890C. $14,780D. $13,518

(75,000 – 70,700) * .25 + 9735 = 10,810

53. Miley, a single taxpayer, plans on reporting $26,350 of taxable income this year (all of her income isfrom a part-time job). She is considering applying for a second part-time job that would give her anadditional $10,000 of taxable income. By how much will the income from the second job increase her taxliability (use the tax rate schedules)?A. $1,000B. $1,500C. $1,600D. $2,500

54. Tamra and Jacob are married and they file a joint tax return. Tamra received nearly three times the salarythat Jacob received. Which of the following statements is true?A. Tamra and Jacob likely pay no tax marriage penalty nor receive a tax marriage benefit.

B. Tamra and Jacob likely pay a tax marriage penalty.C. Tamra and Jacob likely receive a tax marriage benefit.D. Tamra and Jacob likely will pay a tax marriage penalty and receive a tax marriage benefit.

55. Stephanie and Mitch are married and they file a joint tax return. Mitch received a slightly higher salarythan Stephanie did during the year. Which of the following statements is true?A. Stephanie and Mitch likely pay no tax marriage penalty nor receive a tax marriage benefit.B. Stephanie and Mitch likely pay a tax marriage penalty.C. Stephanie and Mitch likely receive a tax marriage benefit.D. Stephanie and Mitch likely will pay a tax marriage penalty and receive a tax marriage benefit.

56. Harrison received a qualified dividend. Without knowing any additional facts, which of the followingstatements is true regarding the rate at which the dividend will be taxed to Harrison?A. The dividend will be taxed at a 15% tax rate.B. The dividend will be taxed at a 0% tax rate.C. The entire dividend will be taxed at either 0% or the entire dividend will be taxed at 15% depending onHarrison's marginal ordinary income tax rate.D. None of these.

57. Jamie is single. In 2012, she reported $100,000 of taxable income, including a long-term capital gainof $5,000. What is her gross tax liability, rounded to the nearest whole dollar amount (use the tax rateschedules)?A. $22,861B. $21,461C. $20,811D. $15,000

58. Angelena files as a head of household. In 2012, she reported $50,000 of taxable income, including a$10,000 qualified dividend. What is her gross tax liability, rounded to the nearest whole dollar amount(use the tax rate schedules)?A. $5,380B. $5,778C. $7,500D. $7,145

59. Which of the following is not a barrier to income shifting among family members?

A. The assignment of income doctrineB. Net unearned income for children 18 and younger taxed at parents' marginal tax ratesC. Elimination of preferential tax rates (on dividends and long-term capital gains) for dependentsD. Two of these

60. The Olympians have three children. The kiddie tax applies to unearned income received by which of thefollowing children?A. Poseidon is a 20-year-old full-time student who does not support himself.B. Demeter, a 23-year-old full-time student who supports herself with a job at a grocery store.C. Zeus is 20 years old and not a student.D. Two of these.E. None of these.

61. Assuming the kiddie tax applies, what amount of a child's income is subject to the kiddie tax?A. All of itB. All of the unearned incomeC. The net unearned incomeD. Taxable income less the standard deduction

62. During 2012, Montoya (age 15) received $2,200 from a corporate bond. He also received $600 froma savings account established for him by his parents. Montoya lives with his parents and he is theirdependent. What is Montoya's taxable income?A. $0B. $2,200C. $2,800D. $1,850

63. During 2012, Jasmine (age 12) received $2,400 from a corporate bond. She also received $600 froma savings account established for her by her parents. Jasmine lives with her parents and she is theirdependent. Assuming her parents' marginal tax rate is 28%, what is Jasmine's gross tax liability?A. $0B. $95C. $308D. $403

64. Hestia (age 17) is claimed as a dependent by her parents, Rhea and Chronus. In 2012, Hestia received

$1,000 of interest income from a bond that she owns. In addition, she has earned income of $200. What isher taxable income for 2012?

A. $0B. $250C. $700D. $1,200

65. Montague (age 15) is claimed as a dependent by his parents Matt and Mary. In 2012, Montague received$5,000 of qualified dividends and he received $800 from a part time job. What is his taxable income for2012?A. $100B. $3,900C. $4,700D. $4,850

66. Hester (age 17) is claimed as a dependent by his parents, Charlton and Abigail. In 2012, Hester received$10,000 of qualified dividends and he received $6,000 from a part time job. What is his taxable incomefor 2012?A. $16,000B. $15,050C. $10,050D. $9,700

67. The alternative minimum tax base is typically ______ the regular income tax base.A. smaller thanB. about the same asC. larger thanD. exactly the same as

68. The computation of the alternative minimum tax base begins with regular taxable income. Which of thefollowing is not part of the formula for computing the alternative minimum tax base?A. Subtract personal exemptions.B. Add the standard deduction amount if used for regular tax.C. Subtract the AMT exemption amount (if any).D. Add back tax exempt interest from a private activity bond not issued in 2009 or 2010.

69. In 2012, Maia (who files as a head of household) reported regular taxable income of $115,000. Sheitemized her deductions, deducting $8,000 in charitable contributions and $3,000 in state income taxes.She claimed exemptions for herself and her son, Hermes, ($3,800 each). What is Maia's alternativeminimum taxable income?A. $118,000B. $115,000C. $118,800D. $125,600

115000 + 3000 + 3800 + 3800

70. Which of the following items is not added back to regular taxable income in computing alternativeminimum taxable income?A. Home mortgage interest expense.B. Real property taxes.C. Tax exempt interest from a private activity bond issued in 2007.D. Miscellaneous itemized deductions in excess of the 2% floor.

Home equity interest is added back if proceeds from the loan are not used toacquire or substantially improve the home.

71. Which of the following statements regarding the AMT exemption amounts is not true?A. The amount of the exemption depends on the taxpayer's filing status.B. The exemption amount is completely phased-out for high income taxpayers.C. Taxpayers must choose whether they will claim the exemption or itemize deductions.D. None of these statements is false (all of these statements are true).

72. Persephone has a regular tax liability of $12,475 and a tentative minimum tax of $11,500. Given just this information, what is her alternative minimum tax liability for the year?A. $0B. $11,500C. $975D. $12,475

Because Persephone's regular tax liability exceeds the tentative minimum tax, she does not owe any alternative minimum tax.

73. Harmony reports a regular tax liability of $15,000 and tentative minimum tax of $17,000. Given just thisinformation, what is her alternative minimum tax liability for the year?A. $0B. $2,000C. $15,000D. $17,000

74. Which of the following statements accurately describes the alternative minimum tax rate(s)?A. The top AMT marginal rate is higher than the top regular tax marginal tax rate.B. The AMT rates represent a progressive tax rate structure.C. The AMT rate is the same rate for all taxpayers.D. None of these.

75. Which of the following is not typical of taxpayers who are most likely affected by the AMT?A. Have many dependentsB. Pay high state income taxC. Pay high property taxesD. Have relatively low capital gains

76. Which of the following could explain why an increasing number of taxpayers are subject to (or couldbecome subject to) AMT?A. Decreasing regular tax ratesB. The AMT exemption amount is indexed to increase with inflationC. Property values are decreasingD.The personal and dependency exemption amounts are not increasing as fast as the AMT exemption is decreasing

77. Asteria earned a $25,500 salary as an employee in 2012. How much should her employer have withheldfrom her paycheck for FICA taxes (rounded to the nearest whole dollar amount)?A. $370B. $1,071C. $1,441D. $3,392

78. Baker earned $113,300 of salary as an employee in 2012. How much should his employer have withheldfrom his paycheck for FICA taxes (rounded to the nearest whole dollar amount)?A. $1,643B. $8,667C. $6,267

D. $6,401

79. Hera had FICA taxes withheld on the $112,000 salary she received as an employee in 2012. Her husband,Zeus, made $70,000 as an employee at a Greek gyro stand. How much must Zeus have withheld for FICAtaxes for 2012, assuming he files a joint return with Hera?A. $0B. $1,015C. $5,355D. $3,955

80. Which of the following statements regarding FICA taxes is true?A. Low income employees are not required to pay FICA taxes.B.An employee who has two different employers during the year may be entitled to a tax credit foroverpaid FICA taxes.C.The maximum amount of Medicare taxes an employee is required to pay is capped each year but themaximum amount of Social Security taxes is not.D. The wage base limit for FICA taxes depends on the taxpayer's filing status.

81. Which of the following suggests that a working taxpayer is an independent contractor rather than anemployee?A. Works for more than one firmB. May realize a loss from business activitiesC. Sets own working hoursD. Works somewhere other than on employer premisesE. All of these suggest independent contractor status

82. Which of the following statements best describes the deductions independent contractors may claim forvalid business expenses?A. for AGI deductionsB. from AGI deductions not subject to the two percent of AGI floorC. from AGI deductions subject to a two percent of AGI floorD. for AGI deductions limited to income from the business activities

83. The wage base for which of the following taxes is capped?A. Federal incomeB. Social SecurityC. MedicareD. Alternative minimum

84. Which of the following statements regarding the self-employment tax is most accurate?A.The self-employment tax base is generally the taxpayer's net income from self-employment (usuallynet income from Schedule C).B.Taxpayers who report less than $600 of net income from self-employment (usually net income fromSchedule C) are not required to pay self employment taxes.C.The self-employment tax base is net earnings from self employment which is less than net income fromself-employment.D. The Social Security tax limit does not apply to self-employment taxes.

85. Which of the following best describes the manner in which self-employed taxpayers may deduct selfemploymenttaxes?A. Deduct employer portion from AGI.B. Deduct entire amount from AGI.C. Deduct employer portion for AGI.D. Deduct entire amount for AGI.E. No deduction

86. For taxpayers who receive both salary as an employee and self-employment income as an independentcontractor in the same year, which of the following statements regarding FICA and self-employmenttaxes is most accurate?A. The Social Security limit applies to the salary but not to the self-employment income.B. The Social Security limit applies to the self-employment income but not to the salary.C.Salary is first applied against the Social Security limit and then self-employment income is appliedagainst the Social Security limit.D.Self-employment income is first applied against the Social Security limit and then salary is appliedagainst the Social Security limit.

87. Which of the following statements concerning differences between employees and independentcontractors is most accurate?

A. Employees and independent contractors deduct business expenses as miscellaneous itemizeddeductions.B.While employees are typically eligible for nontaxable fringe benefits from employers, independentcontractors are not.C.Employers are required to withhold either FICA or self employment taxes from compensation paid toemployees and compensation paid to independent contractors.D.Employers typically withhold federal income taxes from compensation paid to employees and toindependent contractors.

88. Which of the following statements concerning tax credits is true?A. The tax benefit a taxpayer receives from a credit depends on the taxpayer's marginal tax rate.B. Refundable tax credits are limited to a taxpayer's gross tax liability.C. Tax credits are generally more beneficial than tax deductions.D. None of these is a true statement.

89. Which of the following is not one of the general tax credit categories?A. Nonrefundable personalB. Refundable personalC. BusinessD. Refundable business

90. Which of the following statements regarding the child tax credit is false?A. The child for whom the credit is claimed must be under the age of 15 at the end of the year.B. The credit is subject to phase-out based on the taxpayer's AGI.C. The full credit for a child who qualifies is $1,000.D. The child for whom the credit is claimed must meet the definition of a qualifying child.

91. Quantitatively, what is the relationship between the AGI phase-out thresholds for the child tax credit?A. Head of household/Single = Married Filing Separately = Married Filing JointlyB. Head of household/Single < Married Filing Separately < Married Filing JointlyC. Head of household/Single = Married Filing Separately > Married Filing JointlyD. Head of household/Single > Married Filing Separately < Married Filing Jointly

92. Rhianna and Jay are married filing jointly in 2012. They have six children for whom they may claim thechild tax credit. Their AGI was $123,440. What amount of child tax credit may they claim on their 2012tax return?A. $5,300

B. $6,000C. $12,000D. $4,000

93. The amount of expenditures eligible for the child and dependent care credit is the least of three amounts.Which of the following is not one of those amounts?A. The total amount of child and dependent care expenditures for the yearB. $3,000 for one qualifying person or $6,000 for two or more qualifying personsC. The dependent's earned income for the yearD. The taxpayer's earned income for the year

94. Which of the following statements regarding the child and dependent care credit is false?A. Taxpayers may claim a credit for only a portion of qualifying dependent care expenditures.B. If a taxpayer's income is too high, she will be ineligible to claim any child and dependent care credit.C. A single taxpayer must have earned income to claim any child and dependent care credit.D.A taxpayer is not eligible to claim the dependent care credit if any dependent relative provides thecare.

95. Trudy is Jocelyn's friend. Trudy looks after Jocelyn's four-year-old son during the day so Jocelyn can goto work. During the year, Jocelyn paid Trudy $4,000 to care for her son. What is the amount of Jocelyn'schild and dependent care credit if her AGI for the year was $30,000?A. $0B. $810C. $1,080D. $3,000

96. Kaelyn's mother, Judy, looks after Kaelyn's four-year-old twins so Kaelyn can go to work (she drops offand picks up the twins from Judy's home everyday). Since Judy is a relative, Kaelyn made sure, for taxpurposes, to pay her mother the going rate for child care ($6,300 for the year). What is the amount ofKaelyn's child and dependent care credit if her AGI for the year was $36,000?A. $1,440B. $2,100C. $6,000D. $0

97. Which of the following statements regarding the child and dependent care credit is true?A. A married couple must file jointly to claim the credit.B.A taxpayer may claim a credit for dependent care expenses for a dependent who is 14 years old or olderbut only if the dependent lives in the taxpayer's home for the entire year.C.All else equal, a taxpayer making qualifying expenditures for three children may claim more dependentcare credit than a taxpayer making (the same amount of) qualifying expenditures for two children.D. None of these statements is true.

98. Which of the following is not true of the American opportunity credit?A. A taxpayer with multiple eligible dependents can claim a credit for each dependent's qualifyingexpensesB. The credit is available for students during their first four years of postsecondary education onlyC. It is phased out based on the taxpayer's AGID. A taxpayer may not claim a credit unless the taxpayer pays a dependent's qualifying educationalexpenses

99. Which of the following is not true of the lifetime learning credit?A. It is a nonrefundable credit.B.The credit can be claimed by taxpayers who have graduated from college and are taking professionaltraining courses to improve their job skills.C. A taxpayer with multiple dependents can claim a credit for each dependent's qualifying expenses.D. The credit is subject to phase out based on the taxpayer's AGI.

100.Which of the following is not a true statement about the American opportunity credit (AOC) and lifetimelearning credits?A. A taxpayer may not report both an AOC and a lifetime learning credit on the same tax return.B. Certain educational expenses qualify for both credits but taxpayers must claim one credit or the otherfor the expenditures (the taxpayer can not claim both credits for the same expenditures).C.Taxpayers may choose to either (1) deduct qualifying education expenses of an individual as for AGIdeductions or claim educational credits for the individual's expenses (but not both).D.

The AGI phase-out threshold for phasing out the AOC is higher than the AGI phase-out threshold forthe lifetime learning credit.

101.Which of the following statements regarding the earned income credit is true?A. It is a nonrefundable creditB. A taxpayer with more earned income may receive more credit than a taxpayer with less earned incomeC. A 70-year-old taxpayer with no dependents can qualify for the credit in certain circumstancesD. A taxpayer whose only source of income is interest from corporate bonds is eligible for the credit

102.Which of the following does not affect the amount of the earned income credit?A. Filing statusB. Amount of credit taken in previous yearsC. Number of qualifying childrenD. Taxpayer's AGI103.Carolyn has an AGI of $38,000 (all from earned income), two qualifying children, and is filing as a headof household. What amount of earned income credit is she entitled to?A. $0B. $832C. $3,860D. $4,404E. $5,236

104.Which of the following statements regarding credits is correct?A. Business expenses are generally refundable creditsB. Business credits that are generated in one year but are not utilized in that year expireC.Business credits that are generated in one year but are not utilized in that year may be carried forwardto future years but not back to a prior yearD.Business credits that are generated in one year but are not utilized in that year may be carried back tothe previous year and then forward to future years

105.If there is not enough gross tax liability to use the foreign tax credit, _________.A. it expires unusedB. it is carried back 2 years or forward 20 yearsC. it is carried back 3 years or forward 5 yearsD. it is carried back 1 year or forward 10 years

106.Which of the following tax credits is fully refundable?

A. American opportunity creditB. Dependent care creditC. Earned income creditD. None of these

107.How could an individual obtain a business tax credit?A. Through self-employment activitiesB. Through flow-through from a partnership or S corporationC. By working overseas and obtaining a foreign tax creditD. All of these

108.Which of the following represents the correct order in which credits are applied to gross tax liability(from first to last)?A. Nonrefundable personal, business, refundableB. Business, nonrefundable personal, refundableC. Refundable, nonrefundable personal, businessD. Refundable, business, nonrefundable personal

109.Cassy reports a gross tax liability of $1,000. She also claims $400 of nonrefundable personal credits,$700 of refundable personal credits, and $200 of business credits. What is Cassy's tax refund or taxliability due after applying the credits?A. $1,000 taxes payableB. $0 refund or taxes payableC. $700 refundD. $300 refund

110.Sheryl's AGI is $200,000. Her current tax liability is $52,068. Last year, her tax liability was $48,722.She will not owe underpayment penalties if her total estimated tax payments are at least which of thefollowing (rounded) amounts (assume she makes the required payments each quarter)?A. $46,861B. $48,722C. $51,547D. $53,594

111.If an employer withholds taxes from an employee, in general, when are these taxes treated as paid to theIRS?A. As withheldB. As the employee requests on his/her W - 4 formC. Evenly throughout the yearD. On April 15

112.Which of the following statements about estimated tax payments and underpayment penalties is true forindividual taxpayers?A.Taxpayers who have paid their full tax liability by the original tax return due date are protected fromunderpayment penalties.B.Taxpayers who have paid their full tax liability by the extended tax return due date are protected fromunderpayment penalties.C.Taxpayers who have uneven income streams can pay estimated tax quarterly in uneven amounts andnot be susceptible to underpayment penalties.D.Taxpayers who have paid their required amount of estimated tax, even though not on time, areprotected from underpayment penalties.

113.Which of the following statement(s) concerning estimated tax payments and underpayment penalties forindividuals is (are) true?A. Whether taxpayers are subject to underpayment penalties is determined on a quarterly basis.B.Due dates for estimated tax payments for a given year are April 15, June 15, September 15 of that yearand January 15 of the next year unless these dates fall on a weekend or a holiday.C. The amount of penalty depends on the amount of the underpayment among other factors.D. All of these statements are true.

114.What happens if the taxpayer owes an underpayment penalty, but does not compute it on Form 2210?A. Nothing, unless the taxpayer is auditedB. The taxpayer is immediately sent to the Tax CourtC. The IRS will compute and assess the penaltyD. The penalty is increased by five percentage points

115.Happy, Sleepy, Grumpy, and Doc all did not make adequate estimated payments. Which of them will notowe underpayment penalties for 2012 given the following information?A. HappyB. SleepyC. GrumpyD. DocE. Two of theseF. None of these

116.Taxpayers are not required to file a tax return unless their gross income passes a certain threshold. Thisthreshold is generally the _______.A. applicable standard deduction amountB. personal exemption amountC. twice the applicable standard deduction amountD. applicable standard deduction amount plus the personal exemption amount

117.Why would a taxpayer file a tax return if not required to do so?A. to remain in favor with the IRSB. to claim a refund of taxes paidC. all taxpayers are required to file returnsD. in order to claim the standard deduction

118.Looking at the following partial calendar for April, when will individual tax returns be due?A. Friday, April 14B. Saturday, April 15C. Sunday, April 16D. Monday, April 17E. Tuesday, April 18

119.Which of the following is not true of the extension to file an individual tax return?A. It is granted automatically by the IRS if requestedB. It must be requested by the original due date of the returnC.It extends the due date for the return and associated tax payments beyond the original due date of thetax returnD. The extension is for six months beyond the original due date120.Which of the following taxpayers (all age 40) are required to file a return?A. Jenny and JimB. AllenC. TimmyD. None of these

121.What is the underpayment penalty rate that taxpayers pay when they underpay their estimated taxes?A. Federal short-term interest rate.B. Federal short-term interest rate plus three percentage points.C. Federal long-term interest rate.D. Zero. The government does not pay interest on overpayments.

122.Which of the following statements regarding late filing penalties is true?A. If a taxpayer fails to file a tax return, the late filing penalty will continue to grow until

the taxpayerfiles the tax return.B.The amount of the late filing penalty is the same for both fraudulent failure to file and non fraudulentfailure to file.C.Taxpayers who owe no tax as of the due date of their tax returns are not subject to late filing penaltieseven if they file late.D. None of these.

123.Which of the following statements regarding late filing penalties and/or late payment penalties is true?A.An extension of time to file the tax return protects a taxpayer from late payment penalties as long as thetax is paid by the extended due date of the return.B. The penalty rate for late filing penalties is less than the penalty rate for late payment penalties.C.If a taxpayer has not paid the full tax liability by the original due date of the return and the taxpayer hasnot filed a tax return by the due date of the return, the maximum late filing and late payment penalty willbe no greater than the late filing penalty by itself.D. None of these.

CHAPTER 9

36. Tax cost recovery methods do not include:A. AmortizationB. CapitalizationC. DepletionD. DepreciationE. All of these are tax cost recovery methods

37. Which of the following is not depreciated?A. AutomobileB. BuildingC. PatentD. MachineryE. All of these are depreciated

38. Which of the following is not usually included in an asset's tax basis?A. Purchase price

B. Sales taxC. ShippingD. Installation costsE. All of these are included in an asset's tax basis

39. Which of the following would be considered an improvement rather than a routine maintenance?A. Oil changeB. Engine overhaulC. Wiper blade replacementD. Air filter change

40. Tax depreciation is currently under what system?A. Sum of the years digitsB. Accelerated cost recovery systemC. Modified accelerated cost recovery systemD. Straight line systemE. None of these

41. Which is not an allowable method under MACRS?A. 150 percent declining balanceB. 200 percent declining balanceC. Straight lineD. Sum of the years digitsE. All of these are allowable methods under MACRS

42. Which of the allowable methods allows the most accelerated depreciation?A. 150 percent declining balanceB. 200 percent declining balanceC. Straight lineD. Sum of the years digitsE. None of these allow accelerated depreciation

43. How is the recovery period of an asset determined?A. Estimated useful lifeB. Treasury regulationC. Revenue Procedure 87 - 56D. Revenue Ruling 87 - 56E. None of these

44. Which of the following depreciation conventions are not used under MACRS?A. Full-monthB. Half-yearC. Mid-monthD. Mid-quarterE. All of these are used under MACRS

45. Which depreciation convention is the general rule for tangible personal property?A. Full-monthB. Half-yearC. Mid-monthD. Mid-quarterE. None of these are conventions for tangible personal property

46. The MACRS recovery period for automobiles and computers is:A. 3 yearsB. 5 yearsC. 7 yearsD. 10 yearsE. None of these

47. Lax, LLC purchased only one asset during the current year. It placed in service computer equipment (5- year property) on August 26 with a basis of $20,000. Calculate the maximum depreciation expense for the current year (ignoring §179 and bonus depreciation):A. $2,000B. $2,858C. $3,000D. $4,000E. None of these

48. Sairra, LLC purchased only one asset during the current year. It placed in service furniture (7-yearproperty) on April 16 with a basis of $25,000. Calculate the maximum depreciation expense for the current year, rounding to a whole number (ignoring §179 and bonus depreciation):A. $1,786B. $3,573C. $4,463D. $5,000E. None of these

49. Beth's business purchased only one asset during the current year. It placed in service machinery (7-year property) on December 1 with a basis of $50,000. Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation):A. $1,785B. $2,500C. $7,145D. $10,000E. None of these

50. Deirdre's business purchased two assets during the current year. It placed in service computer equipment (5-year property) on January 20 with a basis of $15,000 and machinery (7-year property) on October 1 with a basis of $15,000. Calculate the maximum depreciation expense, rounded to a whole number (ignoring §179 and bonus depreciation):A. $1,286B. $5,144C. $5,786D. $6,000E. None of these

51. Suvi, Inc. purchased two assets during the current year. It placed in service computer equipment (5-year property) on August 10 with a basis of $20,000 and machinery (7-year property) on November 18 with a basis of $10,000. Calculate the maximum depreciation expense, rounded to a whole number (ignoring§179 and bonus depreciation):A. $857B. $3,357C. $5,429D. $6,000E. None of these

52. Wheeler LLC purchased two assets during the current year. It placed in service computer equipment (5-year property) on November 16 with a basis of $15,000 and furniture (7-year property) on April 20 with a basis of $11,000. Calculate the maximum depreciation expense, rounding to a whole number (ignoring§179 and bonus depreciation):A. $1,285B. $2,714C. $4,572D. $5,200E. None of these

53. Tasha LLC purchased furniture (7-year property) on April 20 with a basis of $20,000 and used the midquarterconvention. During the current year, which is the fourth year Tasha LLC owned the property, the property was disposed of on December 15. Calculate the maximum depreciation expense, rounding to a whole number:A. $898B. $2,095

C. $2,461D. $2,394E. None of these

54. Anne LLC purchased computer equipment (5-year property) on August 29 with a basis of $30,000 andused the half-year convention. During the current year, which is the fourth year Anne LLC owned theproperty, the property was disposed of on January 15. Calculate the maximum depreciation expense:A. $432B. $1,728C. $1,874D. $3,456E. None of these

55. Poplock LLC purchased a warehouse and land during the current year for $350,000. The purchase price was allocated as follows: $275,000 to the building and $75,000 to the land. The property was placed in service on August 12. Calculate Poplock's maximum depreciation for this first year, rounded to the nearest whole number:A. $2,648B. $3,371C. $3,751D. $4,774E. None of these

56. Tom Tom LLC purchased a rental house and land during the current year for $150,000. The purchase price was allocated as follows: $100,000 to the building and $50,000 to the land. The property was placed in service on May 22. Calculate Tom Tom's maximum depreciation for this first year:A. $1,605B. $2,273C. $2,408D. $3,410E. None of these

57. Simmons LLC purchased an office building and land several years ago for $250,000. The purchase price was allocated as follows: $200,000 to the building and $50,000 to the land. The property was placed in service on October 2. If the property is disposed of on February 27 during the 10 th year, calculate Simmons' maximum depreciation in the 10 th year:A. $641B. $909C. $5,128D. $7,346E. None of these

58. Lenter LLC placed in service on April 29, 2012 machinery and equipment (7-year property) with a basisof $500,000. Assume that Lenter has sufficient income to avoid any limitations. Calculate the maximumdepreciation expense including §179 expensing (but ignoring bonus depreciation):A. $71,450.B. $139,000.C. $190,587.D. $210,450.E. None of these.

59. Littman LLC placed in service on July 29, 2012 machinery and equipment (7-year property) with a basis of $500,000. Littman's income for the current year before expensing was $100,000. Calculate the maximum depreciation expense including §179 expensing (but ignoring bonus depreciation):A. $71,450.B. $190,587.C. $157,160.D. $210,450E. None of these.

60. Crouch LLC placed in service on May 19, 2012 machinery and equipment (7-year property) with a basis of $650,000. Assume that Crouch has sufficient income to avoid any limitations. Calculate the maximum depreciation expense including §179 expensing (but ignoring bonus depreciation):A. $92,885.B. $134,883.C. $212,022.D. $231,885.E. None of these.

61. Clay LLC placed in service machinery and equipment (7-year property) with a basis of $600,000 on June 6, 2012. Assume that Clay has sufficient income to avoid any limitations. Calculate the maximum depreciation expense including §179 expensing (ignoring any possible bonus depreciation), rounded to awhole number:A. $170,593B. $204,877C. $224,740D. $285,940

E. None of these

62. Bonnie Jo purchased a used computer (5-year property) for use in her sole proprietorship. The basis of the computer was $2,400. Bonnie Jo used the computer in her business 60 percent of the time and used itfor personal purposes the rest of the time during the first year. Calculate Bonnie Jo's depreciation expenseduring the first year assuming the sole proprietorship had a loss during the year (Bonnie did not place the property in service in the last quarter):A. $240B. $288C. $480D. $2,400E. None of these

63. Billie Bob purchased a used computer (5-year property) for use in his sole proprietorship in the prior year. The basis of the computer was $2,400. Billie Bob used the computer in his business 60 percent of the time during the first year. During the second year, Billie Bob used the computer 40 percent for business use. Calculate Billie Bob's depreciation expense during the second year assuming the sole proprietorship had a loss during the year (Billie Bob did not place the asset in service in the last quarter):A. $0B. $48C. $192D. $336E. None of these

64. Potomac LLC purchased an automobile for $30,000 on August 5 th of 2012. What is Potomac's depreciation expense for 2012 (ignore any possible bonus depreciation)?A. $3,060B. $4,287C. $6,000D. $30,000E. None of these

65. Arlington LLC purchased an automobile for $40,000 on July 5 th of 2012. What is Arlington's depreciation expense for 2012 if its business use percentage is 75 percent (ignore any possible bonus depreciation)?A. $2,295B. $3,060C. $6,000D. $8,000

E. None of these

66. Assume that Bethany acquires a competitor's assets on March 31 st. The purchase price was $150,000. Of that amount, $125,000 is allocated to tangible assets and $25,000 is allocated to goodwill (a §197 intangible asset). What is Bethany's amortization expense for the current year, rounded to the nearest whole number?A. $0B. $1,250C. $1,319D. $1,389E. None of these

67. Assume that Brittany acquires a competitor's assets on September 30 th of the prior year. The purchase price was $350,000. Of that amount, $300,000 is allocated to tangible assets and $50,000 is allocatedequally to two §197 intangible assets (goodwill and a 1-year non-compete agreement). Given, that the non-compete agreement expires on September 30 th of year 2, what is Brittany's amortization expense for the second year, rounded to the nearest whole number?A. $0B. $1,667C. $2,917D. $3,333E. None of these

68. Jasmine started a new business in the current year. She incurred $10,000 of start-up costs. How much of the start-up costs can be immediately expensed for the year?A. $0B. $2,500C. $5,000D. $10,000E. None of these

69. Racine started a new business in the current year. She incurred $52,000 of start-up costs. If her business started on November 23 rd of the current year, what is the total expense she may deduct with respect to the start-up costs for her initial year, rounded to the nearest whole number?A. $2,555.B. $3,544.C. $5,522.D. $52,000.E. None of these.

70. Daschle LLC completed some research and development during June of the current year. The relatedcosts were $60,000. If Daschle wants to capitalize and amortize the costs as quickly as

possible, what isthe total amortization expense Daschle may deduct during the current year?A. $0B. $6,500C. $7,000D. $12,000E. None of these71. Jorge purchased a copyright for use in his business in the current year. The purchase occurred on July15 th and the purchase price was $75,000. If the patent has a remaining life of 75 months, what is the totalamortization expense Jorge may deduct during the current year?A. $0B. $5,500C. $6,000D. $12,000E. None of these

72. Geithner LLC patented a process it developed in the current year. The patent is expected to createbenefits for Geithner over a 10 year period. The patent was issued on April 15 th and the legal costsassociated with the patent were $43,000. In addition, Geithner had unamortized research expenditures of$15,000 related to the process. What is the total amortization expense Geithner may deduct during thecurrent year?A. $2,417B. $2,559C. $4,108D. $4,350E. None of these

73. Santa Fe purchased the rights to extract turquoise on a tract of land over a five-year period. Santa Fepaid $300,000 for extraction rights. A geologist estimates that Santa Fe will recover 5,000 pounds ofturquoise. During the current year, Santa Fe extracted 1,500 pounds of turquoise, which it sold for$200,000. What is Santa Fe's cost depletion expense for the current year?A. $60,000B. $90,000C. $110,000D. $300,000E. None of these