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1. In which of the following situations may taxpayers file as married filing jointly?
A) Taxpayers who were legally separated but lived together for the entire year.
B) Taxpayers who were divorced during the year.
C) Taxpayers who were married but lived under a legal separation agreement at the end of the year.
D) Taxpayers who were married but lived apart during the year.
2. Barkley owns a vacation cabin that was rented to unrelated parties for 10 days during the year for $2,500.
The cabin was used personally by Barkley for three months and left vacant for the rest of the year.
Expenses for the cabin were as follows:
Real estate taxes $1,000
Maintenance and utilities $2,000
How much rental income (loss) is included in Barkley's adjusted gross income?
A) $(1,500)
B) $0
C) $500
D) $(500)
3. Under the uniform capitalization rules applicable to taxpayers with property acquired for resale, which of
the following costs should be capitalized with respect to inventory if no exceptions have been met?
A) Option A
B) Option C
C) Option B
D) Option D
4. Clark bought Series EE U.S. Savings Bonds after 1989. Redemption proceeds will be used for payment of
college tuition for Clark's dependent child. One of the conditions that must be met for tax exemption of
accumulated interest on these bonds is that the:
A) Purchaser of the bonds must be the sole owner of the bonds (or joint owner with his or her spouse).
B) Bonds must be bought by the owner of the bonds before the owner reaches the age of 24.
C) Bonds must be transferred to the college for redemption by the college rather than by the owner of the
bonds.
D) Bonds must be bought by a parent (or both parents) and put in the name of the dependent child.
5. DAC Foundation awarded Kent $75,000 in recognition of lifelong literary achievement. Kent was not
required to render future services as a condition to receive the $75,000. What condition(s) must have
been met for the award to be excluded from Kent's gross income?
I. Kent was selected for the award by DAC without any action on Kent's part.
II. Pursuant to Kent's designation, DAC paid the amount of the award either to a governmental unit or to a
charitable organization.
A) II only.
B) Both I and II.
C) I only.
D) Neither I nor II.
Solutions:
| Question # 1 Answer: D | Question # 2 Answer: B | Question # 3 Answer: A | Question # 4 Answer: A | Question # 5 Answer: B |
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