Question 1

Due to population change, Goose Creek School District has decided to close one of its high schools. Since it has no further need of the property, the school is listed for sale. The two bids it receives are as follows: $\begin{array}{lr}
\text { United Methodist Church } & \$ 1,700,000 \
\text { Planet Motors } & 1,600,000
\end{array}$ The United Methodist Church would use the property to establish a sectarian middle school. Planet, a well-known car dealership, would revamp the property and operate it as a branch location.
If you were a member of the School District board, what factors would you consider in evaluating the two bids?

Accepted Answer

Although the bid from the United Methodi...

Question 2

Several years ago, Logan purchased extra grazing land for his ranch at a cost of $240,000. In 2018, the land is condemned by the state for development as a highway maintenance depot. Under the condemnation award, Logan receives $600,000 for the land. Within the same year, he replaces the property with other grazing land. What is Logan's tax situation if the replacement land cost:
a. $210,000?
b. $360,000?
c. $630,000?
d. Why?

Accepted Answer

a. The full realized gain of $360,000 [$...

Question 3

Melinda has been referred to you by one of your clients. In the past, she has prepared her own income tax returns, but she has become overwhelmed by the increased complexity of the tax law. Consequently, Melinda wants you to prepare her return for calendar year 2019. In reviewing her 2018 return, you note that she has claimed as a deduction the entire cost of a business building that should have been capitalized and depreciated. What course of action should you follow?

Accepted Answer

You should recommend to Melinda that an ...

Question 4

Burt and Lisa are married and live in a common law state. Burt wants to make gifts to their four children in 2019. What is the maximum amount of the annual exclusion they will be allowed for these gifts?

Accepted Answer

A)   $15,000.
B)   $30,000.
C)   $60,000.
D)   $120,000.
E)   None of these.F) None of the above
G) A) and C)

Question 5

When interest is charged on a deficiency, any part of a month counts as a full month.

Accepted Answer

A) True 
 B)False

Question 6

Which, if any, is not one of Adam Smith's canons (principles)  of taxation?

Accepted Answer

A)   Economy in collection
B)   Certainty
C)   Convenience of payment
D)   Simplicity
E)   EqualityF) B) and D)
G) A) and E)

Question 7

The tax law allows, under certain conditions, deferral of gain recognition for involuntary conversions.
a. By recognizing that the taxpayer's relative economic situation has not changed and that he or she lacks the wherewithal to pay a tax, any recognition of realized gain
a. What is the justification for this relief measure?
b. What happens if the proceeds are not entirely reinvested?

Accepted Answer

is deferred.
b. If the proceeds from an ...

Question 8

A rationale for the installment sale method tax rule is:

Accepted Answer

A)   Ability to pay.
B)   Equity and fairness.
C)   Simplicity.
D)   Revenue neutrality.E) A) and D)
F) B) and D)

Exam 1: Understanding and Working With the Federal Tax Law

Correct Answer
verified
a. The full realized gain of $360,000 [$...
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Correct Answer
verified
You should recommend to Melinda that an ...
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Which, if any, is not one of Adam Smith's canons (principles) of taxation?

Correct Answer
verified

A rationale for the installment sale method tax rule is:

Correct Answer
verified

Correct Answer
verified
Although the bid from the United Methodi...
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Burt and Lisa are married and live in a common law state. Burt wants to make gifts to their four children in 2019. What is the maximum amount of the annual exclusion they will be allowed for these gifts?

Correct Answer
verified

When interest is charged on a deficiency, any part of a month counts as a full month.

Correct Answer
verified

Correct Answer
verified
is deferred.
b. If the proceeds from an ...
View Answer

Exam 1: Understanding and Working With the Federal Tax Law

Correct Answerverifieda. The full realized gain of $360,000 [$...View AnswerShow Answer

Correct AnswerverifiedYou should recommend to Melinda that an ...View AnswerShow Answer

Which, if any, is not one of Adam Smith's canons (principles) of taxation?

Correct AnswerverifiedShow Answer

A rationale for the installment sale method tax rule is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedAlthough the bid from the United Methodi...View AnswerShow Answer

Burt and Lisa are married and live in a common law state. Burt wants to make gifts to their four children in 2019. What is the maximum amount of the annual exclusion they will be allowed for these gifts?

Correct AnswerverifiedShow Answer

When interest is charged on a deficiency, any part of a month counts as a full month.

Correct AnswerverifiedShow Answer

Correct Answerverifiedis deferred.b. If the proceeds from an ...View AnswerShow Answer

Correct Answer
verified
a. The full realized gain of $360,000 [$...
View Answer

Correct Answer
verified
You should recommend to Melinda that an ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Although the bid from the United Methodi...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
is deferred.
b. If the proceeds from an ...
View Answer