1. (TCO E) For federal tax purposes, royalty income that is not derived in the ordinary course of a business is classified as:
None of the above
2. (TCO F) When comparing corporate and individual taxation, the following statements are true, except:
Individuals have exemptions and a standard deduction; corporations do not.
Both types of taxpayers have percentage limitations on the charitable contribution deduction, coupled with a carryover of the excess contribution.
All taxpayers may carry net operating losses back two years, forward 20 years.
Both corporate and individual taxpayers may have a long-term capital loss carryforward.
4. (TCO B) Charitable contribution deductions for cash donations made by individuals to public charities are limited to:
50% of AGI.
40% of AGI.
30% of AGI.
20% of AGI
5. (TCO A) The following taxes were paid by Tim:
6. (TCO F) Hoover, Inc. had gross receipts from operations of $230,000, operating and other expenses of $310,000, and dividends received from a 45 percent-owned domestic corporation of $120,000. Hoover's tax position for the year is:
$8,000 taxable income.
$56,000 net operating loss.
$40,000 taxable income.
$80,000 net operating loss.
7. (TCO G) All of the outstanding stock of a closely held C corporation is owned equally by David Smith and Steve Bufusno. In 2011, the corporation generates taxable income of $30,000 from its active business activities. In addition, it earns $20,000 of interest from investments and incurs a $40,000 loss from a passive activity. How much income does the C corporation report for 2011?
$10,000 of portfolio income
$20,000 of portfolio income
None of the above
8. (TCO G) Steve, who is single, has $100,000 of salary, $10,000 of income from a limited partnership, and a $25,000 passive loss from a real estate rental activity in which he actively participates. His modified adjusted gross income is $100,000. Of the $25,000 loss, how much is deductible?
9. (TCO F) Sara owns a sole proprietorship, and Phil is the sole shareholder of a C (regular) corporation. Each business sustained a $9,000 operating loss and a $2,000 capital loss for the year. Evaluate how these losses will affect the taxable income of the two owners?
10. (TCO G) Briefly (1) define and (2) discuss the purpose and impact of each of the following:
a. net operating loss
b. at-risk rules
c. tax shelter
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- Posted on Jun. 01, 2012 at 10:06:53AM