Liberty BUSI 352 Quiz 6 Answers Complete Solutions

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Question 1 Jason has three capital transactions for the current year. Short­term capital loss of $5,000 Short­term capital gain of $3,000 Long­term capital loss of $2,000 What is the net effect on Jason’s taxes if he is in the 35% tax bracket?

Question 2 Cobalt, a calendar­year S corporation, was incorporated in 2010. The company had the following taxable income and distributions each year: Year 2010: Taxable income ($20,000); Distributions $0 Year 2011: Taxable income ($30,000); Distributions $0 Year 2012: Taxable income $150,000; Distributions $60,000 Year 2013: Taxable income $400,000; Distributions $175,000 Cobalt has a single shareholder. His original basis in the stock was $150,000. What is the shareholder’s basis at the end of 2013?

Question 3 Angie and Patrick were married on September 1 of this year. Following a honeymoon in Hawaii, Patrick died of a heart attack. Neither Angie nor Patrick had any dependents. What filing status can Angie use this year?

Question 4 Which of the following is not excluded from gross income?

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Question 5 Which of the following statements is/are true? 1: LLCs offer limited liability protection to members. 2: S corporations offer limited liability protection to owners.

Question 6 Which of the following statements is/are true? 1: Partnerships offer limited liability protection to partners. 2: LLCs offer limited liability protection to members.

Question 7 Greg just received his student loan statement that indicates he paid $3,000 of interest on his student loan during the tax year. How much of the loan may he deduct?

Question 8 Which of the following statements is/are true? 1: Partnerships require registration with the state. 2: Limited partnerships require registration with the state.

Question 9 Trina gave her nephew Roy 100 shares of HLM Corporation stock that she purchased 6 months ago for $10,000. At the time of the gift, the fair market value of the stock was $12,000. Which of the following statements concerning the stock is correct?

Question 11 An S corporation has the following information for the taxable year. Net Income before the items below $90,000 Bill’s Salary ($38,000) Other Income $29,000 Other Expenses ($14,000) Net Income $67,000 Bill is a 20 percent owner of the S corporation and he performs services for the business as an employee. What is Bill’s self­employment income?

Question 12 Isaac is a middle school teacher with gross income this year of $35,000. Based on the following, what is Isaac’s adjusted gross income? 1: $4,000 qualified education interest expense 2: $2,000 alimony received 3: $1,000 contribution to a traditional IRA 4: $750 in educator expenses

Question 13 An architect performed services for Bill and Sue and, in lieu of her normal fee, accepted a 10% interest in a partnership with a fair market value of $10,000. How much income from this arrangement should the architect report on her income tax return?

Question 15 Aurora had the following cash inflows during the current taxable year. 1: Wages: $45,000 2: Loan Proceeds: $2,000 3: Child Support: $5,000 4: Stock Sale Proceeds: $3,000 5: U.S. Government Bond Interest: $1,000 What is her gross income for income tax purposes if her adjusted tax basis in the stock was $2,000?