QuestionQuestion

1. Sara is single. In 2013, she reported $100,000 of taxable income, including a long-term capital gain of $5,000. What is her gross tax liability (use the tax rate schedules)?

2. During 2013, Matt (age 13) received $2,400 from a corporate bond. He also received $600 from a savings account established for him by his grandparents. Matt lives with his parents and he is their dependent. Assuming his parents' marginal tax rate is 28%, what is Matt's gross tax liability?

3. Helen (age 15) is claimed as a dependent by her parents Sam and Ellen. In 2013, Helen received $5,000 of qualified dividends and she received $800 from a part time job. What is her taxable income for 2012?

4. Using the facts in question 3, assuming her parent’s marginal rate is 28%, what is Helen’s gross tax liability?

5. Jim is a florist, and this year one of his flower delivery vans was damaged in a traffic accident. The van was originally purchased for $32,000 and the adjusted basis was $2,000 at the time of the accident. The van was repaired at a cost of $2,500 and insurance reimbursed Jim $700 of this cost. Jim’s adjusted gross income before this casualty loss was $82,000. What is the amount of Jim’s casualty loss deduction?

6. Gwen owns a storage facility. During the year, one of her buildings was completely destroyed by a fire.   At the time of the fire, the building’s adjusted basis was $80,000 and its fair market value was $90,000. The building was insured for 80% of its fair market value and Gwen received insurance proceeds of that amount.   Gwen’s adjusted gross income before this loss was $80,000. What is the amount of Gwen’s casualty loss deduction?

7. White 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 22. If the property is disposed of on February 2 during the 10th year, calculate Francis' maximum depreciation in the 10th year.

8. Black LLC placed in service on April 29, 2013 machinery and equipment (7-year property) with a basis of $600,000. Black's income for the current year before expensing was $100,000. Calculate the maximum depreciation expense including section 179 expensing (but ignoring bonus expensing).

9. Michelle LLC purchased furniture (7-year property) on April 3 with a basis of $20,000. It used the property during the year, but disposed of it on December 15. Calculate the maximum depreciation expense, rounding to a whole number.

10. Quentin’s business purchased only one asset during the current year. It placed in service machinery (7-year property) on December 9 with a basis of $50,000. Calculate the maximum depreciation expense (ignoring section 179 and bonus expensing).

11. Clint's business purchased two assets during the current year. It placed in service computer equipment (5-year property) on June 20 with a basis of $15,000 and machinery (7-year property) on October 14 with a basis of $15,000. Calculate the maximum depreciation expense, rounded to a whole number (ignoring section 179 and bonus expensing).

12. On May 5, 2012, Bob purchased an automobile, which he uses 60% for business, for $30,000. What is Bob's depreciation expense for 2012, if he does not make any affirmative election regarding bonus depreciation?

13. This year Brittany acquires a competitor's assets on March 1st for $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 Brittany's amortization expense for the current year, rounded to the nearest whole number?
14. Yvonne sold a machine that she uses in her business for a note receivable in four annual installments of $14,000. The first payment was received in the current year. She originally bought the machine two years ago for $28,000 and had claimed $8,000 in depreciation expense against the machine. What is the amount and character of her gain?

15. Shevonne exchanged an office building with a fair market value of $125,000 for another office building with a fair market value of $105,000 and $20,000 in cash. She originally bought the office building seven years ago for $93,000 and has taken $22,000 in depreciation. What is the amount and character of her gain?

16. LaToya had the following capital gains (losses) from the sale of her investments: $2,000 LTCG, $25,000 STCG, ($9,000) LTCL, and ($15,000) STCL. What is the amount and nature of LaToya's capital gains and losses?

17. Brown purchased machinery on September 12th of the current year. The relevant costs for the year are as follows: machinery for $10,000, $800 shipping, $50 for delivery insurance, $500 for installation, $750 for sales tax, $150 for the annual tune up, and $200 of property taxes (an annual tax on business property). What is Brown’s tax basis for the machinery?

18. Mary sold 10 shares of stock to her brother, Paul, for $500 six months ago. Mary had purchased the stock for $600 two years earlier. If Paul sells the stock for $700, what is the amount and character of his recognized gain or loss in the current year?

19. Red Corporation sold a parcel of land valued at $300,000. Its basis in the land was $250,000. For the land, Red received $150,000 in cash in the current year and a note providing Red with $150,000 in the subsequent year. What is Red’s recognized gain in the current and subsequent year, respectively?

20. Silver Mine (LLC) purchased a silver deposit for $1,500,000. It estimated it would extract 500,000 ounces of silver from the deposit. Silver mined the silver and sold it reporting gross receipts of $1.8 million, $2.5 million, and $2 million for years 1 through 3, respectively. During years 1 - 3, Silver reported net income (loss) from the silver deposit activity in the amount of ($100,000), $400,000, and $100,000, respectively. In years 1 - 3, Silver actually extracted 300,000 ounces of silver as follows:

What is Silver’s depletion expense for year 2 if the applicable percentage depletion for silver is 15 percent?

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