ACTG067 WINTER 2017 Midterm. Feedback Rationale Provided.

ACTG067 WINTER 2017 Midterm Due Feb 22 at 1:59am Points 100 Questions 50 Available Feb 19 at 10am ­ Feb 22 at 1:59am 3 days Time Limit 150 Minutes Instrucƭons Azempt History Attempt Time Score LATEST Attempt 1 73 m ...

ACTG067 WINTER 2017 Midterm Due Feb 22 at 1:59am Points 100 Questions 50 Available Feb 19 at 10am ­ Feb 22 at 1:59am 3 days Time Limit 150 Minutes Instrucƭons Azempt History Attempt Time Score LATEST Attempt 1 73 minutes 68 out of 100 Correct answers will be available on Feb 22 at 1:59am. Score for this quiz: 68 out of 100 Submitted Feb 20 at 3:29pm This attempt took 73 minutes. Answer all 50 questions directly on the screen. Select one best answer. You have 2.5 hours to complete this test. I suggest to write down your answers as you progress. In case of disconnection email me your answers within 15 min the link expires. ¿ Question 1 2 / 2 pts Ellen supports her family as a self­employed attorney. She reports $90,000 of income on her Schedule C and pays $8,000 for health insurance for her family, $2,500 for dental insurance, $4,000 for health insurance for her 23­ year­old daughter who is no longer a dependent, and $3,000 for disability insurance for herself. What is Ellen’s self­employed health insurance deduction? $8,000 $14,500 $13,500 $10,500$12,000 Feedback Rationale: $8,000 + $2,500 + $4,000 Question 2 2 / 2 pts Bill is the owner of a house with two identical apartments. He resides in one apartment and rents the other apartment to a tenant. The tenant made timely monthly rental payments of $550 per month for the months of January through December 2015. The following expenses were incurred on the entire building: Utilities $3,600 Maintenance and repairs 900 Insurance 500 In addition, depreciation allocable to the rented apartment is $1,500. What amount should Bill report as net rental income for 2015? $0 $100 None of the above $1,400 $2,600 Feedback Rationale: [$6,600 (12 × $550) ­ $1,500 ­ 50% × ($3,600 + $900 + $500) = $2,600] Incorrect Question 3 0 / 2 ptsVernon is a cash basis taxpayer with a calendar tax year. On October 1, 2015, Vernon entered into a lease to rent a building for use in his business at $3,000 a month. On that day Vernon paid 18 months rent on the building, a total of $54,000 ($3,000 × 18 months). How much may Vernon deduct for rent expense on his 2015 tax return? $36,000 None of the above $12,000 $0 $54,000 Feedback Rationale: $3,000 x 3 months = $9,000. Question 4 2 / 2 pts Clark, a widower, maintains a household for himself and his two dependent preschool children. For the year ended December 31, 2015, Clark earned a salary of $32,000. He paid $3,600 to a housekeeper to care for his children in his home, and also paid $1,500 to a kiddie play camp for child care. He had no other income or expenses during 2015. How much can Clark claim as a child and dependent care credit in 2015? None of the above $1,300 $1,326 $5,100 $910Feedback Rationale: 26% × ($3,600 + $1,500) Question 5 2 / 2 pts What is the maximum amount of home equity debt (not acquisition debt) on which interest is fully deductible? $50,000 $100,000 None of the above $200,000 $0 Question 6 2 / 2 pts Choose the correct statement: A taxpayer may receive a 30­percent credit for installing a windmill, which generates electricity, at his vacation home. A taxayer may receive a 30­percent credit for installing energy­efficient window shades. A taxpayer may receive a 30­percent credit for installing a solar water­heating panel for his swimming pool. A taxpayer may receive a 30­percent credit for the purchase of a plug­in electric vehicle.Incorrect Question 7 0 / 2 pts Jon, age 45, had adjusted gross income of $26,000 in 2015. During the year, he incurred and paid the following medical expenses: Drugs and medicines prescribed by doctors $ 300 Health insurance premiums $ 750 Doctors' fees $2,250 Eyeglasses $ 75 Jon received $900 in 2015 as a reimbursement for a portion of the doctors' fees. If Jon were to itemize his deductions, what would be his allowable medical expense deduction after the adjusted gross income limitation is taken into account? $600 $425 $0 None of the above $1,000 Feedback Rationale: ($300 + $750 + $2,250 + $75 ­$900) – (10% × $26,000) Question 8 2 / 2 pts Jim has foreign income. He earns $26,000 from Country A which taxes the income at a 20 percent rate. He also has income from Country B of $18,000. Country B taxes the $18,000 at a 10 percent rate. His U.S. taxable income is $90,000, which includes the foreign income. His U.S. income tax on all sources of income before credits is $19,000. What is his foreign tax credit?$19,000 $9,289 $7,000 $6,500 Jim does not qualify for a foreign tax credit. Feedback Rationale: $7,000 calculated as the lesser of ($26,000 × 20%) + ($18,000 × 10%) = $7,000 or ($26,000 + $18,000) / $90,000 × $19,000 = $9,289 Incorrect Question 9 0 / 2 pts Which one of the following is not considered a casualty or theft loss for tax purposes? All of the above are casualty or theft losses. A taxpayer’s residence is burned down during a wild fire. A taxpayer’s residence is progressively destroyed by termites A taxpayer’s bicycle is vandalized by local teenagers. A taxpayer’s car is destroyed by wild fire. Incorrect Question 10 0 / 2 pts Which of the following is not deductible as a moving expense? The cost of moving household goodsAll of the above are deductible as moving expenses Lodging for household members during the move Travel expenses during the move The cost of a pre­move house­hunting trip Question 11 2 / 2 pts Which one of the following conditions must be satisfied in order for a married taxpayer to be taxed on only his income if he resides in a community property state? Only one of the spouses can be working and earning an income. The husband and wife must live apart for the entire year. The husband and wife must be in the process of filing for a divorce. The husband and wife must live apart for more than half the year. None of the above. Question 12 2 / 2 pts Steve goes to Tri­State University and pays $40,000 in tuition. Steve works a part­time job to pay for his schooling and has an AGI of $17,000. How much is his American Opportunity tax credit? $4,000 $2,000 $2,500 He does not qualify for the American Opportunity tax credit.$1,000 Question 13 2 / 2 pts ABC Corp bought a production machine on January 1, 2013 for $31,250. The company elected out of Section 179 expensing and elected out of claiming bonus depreciation in 2013, and is depreciating the machine using the MACRS accelerated depreciation tables for 5­year property. What is the 2015 depreciation (year 3) deduction for the machine? $6,000 $6,250 $12,500 None of the above is correct $10,000 Feedback Rationale: $6,000. $31,250 × 19.2% Question 14 2 / 2 pts Household income for purpose of the premium tax credit includes all of the following except: Any tax­exempt income AGI of the taxpayer Untaxed Social Security benefits AGI of the taxpayer's dependentsAll of the above are included in household income Incorrect Question 15 0 / 2 pts Which of the following is not a requirement to claim an earned income credit? US citizenship or resident alien status At least $1 of earned income Social Security number At least one child claimed as a dependent Question 16 2 / 2 pts Nancy has active modified adjusted gross income before passive losses of $125,000. She has a loss of $15,000 on a rental property she actively manages. How much of the loss is she allowed to deduct against the $125,000 of other income? $2,500 $5,000 $12,500 None Feedback Rationale: AGI = $125,000 ­ $100,000 = $25,000 excess over threshold. $25,000 x 50% = $12,500 of loss phased out leaving $12,500 of loss limitation Actual loss of $15,000 is more than $12,500 limit thus $12,500 of loss is permitted.Incorrect Question 17 0 / 2 pts On June 1, 2015, Sandalwood Corporation purchases a passenger automobile for 100 percent use in its business. The automobile is in the 5 year cost recovery class and has a basis for depreciation of $30,000. Assuming that the corporation elects the accelerated method of cost recovery for the asset and does not elect to expense any of its cost or take bonus depreciation, what is the total tax depreciation deduction for the 2015 calendar tax year (Year 1)? $3,160 $6,000 $3,060 None of the above $4,287 Feedback Rationale: Lesser of $30,000 × 20% = $6,000 or $3,160 limitation Incorrect Question 18 0 / 2 pts Toni and Beyonze are married and file jointly. During 2015, they paid tuition for their daughter’s college in the amount of $23,000. If their AGI was $142,000, what is the amount of tuition deduction they are eligible for? $2,000 $23,000 None of the above $4,000$0 Feedback Rationale: With AGI of $142,000, Toni and Beyonze can deduct up to $2,000 of qualified tuition costs if the tuition deduction is extended in 2015. Note that Toni and Beyonze may also want to consider any available education credits instead of the deduction. Question 19 2 / 2 pts Which of the following statements is true of a distribution rollover (not a trustee­to­trustee transfer) from a retirement plan? All of the above are true. In one year, there is no limit to the number of times a taxpayer can request a distribution rollover from one IRA to another IRA. The taxpayer must instruct the trustee of the retirement plan to transfer assets to the trustee of another plan. No withholding is required. Assuming there are no unusual events, the taxpayer has a maximum of 60 days in which to transfer funds to a new plan to avoid current taxes and penalties. Question 20 2 / 2 pts What is the minimum number of years over which computers may be depreciated under MACRS? 5 years 10 years15 years 3 years 7 years Question 21 2 / 2 pts Cork Oak Corporation purchased a heavy­duty truck (not considered a passenger automobile for purposes of the listed property and luxury automobile limitations) on May 1, 2015 for use in its business. The truck, with a cost basis of $24,000, has a 5­year estimated life. It also is 5­year recovery property. How much depreciation should be taken on the truck for the 2015 calendar tax year using the conventional (for financial accounting purposes) straight­line depreciation method? $2,400 None of the above $4,800 $400 $3,200 Feedback Rationale: $3,200. $24,000 / 60 months × 8 months Question 22 2 / 2 pts Lee and Pat are married taxpayers living in Louisiana. Lee earns wages of $40,000 and has $5,000 of dividend income from separate property. Lee and Pat have interest income from community property of $10,000. If Lee and Pat file separate income tax returns, what amount of income must be included on Lee's separate tax return?$50,000 $27,500 None of the above $25,000 $30,000 Feedback Rationale: ($40,000 + $5,000 + $10,000) / 2 Incorrect Question 23 0 / 2 pts A taxpayer places a $50,000 5­year recovery period asset in service in 2015. This is the only asset placed in service in 2015. Assuming half­year convention, no immediate expensing, and no income limitation, what is the amount of bonus depreciation (assuming extended into 2015)? $50,000 None of the above $25,000 $15,000 $0 Feedback Rationale: $50,000 x 50% = $25,000. Question 24 2 / 2 ptsIf a loss from sale or exchange of property between related parties is disallowed and the property is subsequently sold to an unrelated party, The unrelated party may claim the loss previously disallowed. The disallowed loss may be used if there is a further loss on the subsequent sale. An amended return may be filed to claim the loss previously disallowed. The disallowed loss may be used to offset gain on the subsequent sale. The disallowed loss is lost forever. Question 25 2 / 2 pts Peter is a plumber employed by a major contracting firm. During the current year, he paid the following miscellaneous expenses: Unreimbursed employee business expenses $450 Union dues $600 Tax return preparation fee $100 Safe deposit box rental fee (used only for personal effects) $ 20 If Peter were to itemize his deductions for the current year, what amount could he claim as miscellaneous itemized deductions (before applying the 2 percent of adjusted gross income limitation)? $100 $550 None of the above $1,070 $1,150Feedback Rationale: $450 + $600 + $100 Incorrect Question 26 0 / 2 pts Kate is an accrual basis, calendar­year taxpayer. On November 1, 2015, Kate leased out a building for $4,500 a month. On that day Kate received 7 months rental income on the building, a total of $31,500 ($4,500 × 7 months). How much income must Kate include on her 2015 tax return as a result of this transaction? $31,500 $9,000 $54,000 $4,500 None of the above Question 27 2 / 2 pts To qualify for the additional child tax credit all of the above are required to qualify for the additional child tax credit the taxpayer must have earned income of over $3,000 the typical child yax credit must be limited by tax liability the taxpayer must have at least one qualifying childQuestion 28 2 / 2 pts For married taxpayers filing a joint return in 2015, at what AGI level does the phase­out limit for contributions to Qualified Tuition Programs (Section 529 plans) start? $188,150 $150,500 There is no phase­out limit on Qualified Tuition Program contributions. $225,750 Incorrect Question 29 0 / 2 pts If a residence is rented for 15 days or more and is used for personal purposes for not more than 14 days or 10 percent of the days rented, whichever is greater, no allocation of expenses is required and the taxpayer may claim a deduction for the full amount of the expenses. True False Feedback Rationale: If a residence is primarily used as a rental, the expenses must still be allocated between personal and rental days. Question 30 2 / 2 pts Paul earns $55,000 during the current year. His employer contributes $3,000 during the year to a qualified retirement plan on behalf of Paul. The amount of the contribution for the year is based on Paul's desire to have a monthly retirement benefit of $3,500. What type of retirement plan is this?None of the above Defined contribution plan Defined benefit plan Employee earnings plan Profit sharing plan Incorrect Question 31 0 / 2 pts Stewart had adjusted gross income of $22,000 in 2015. During the year, he made the following contributions to qualified charities: $7,000 cash 1,000 shares of Able Corporation common stock, acquired in 1980 (cost and fair market value of $5,000) Considering the charitable contribution deduction limitation, what amount can Stewart claim as a deduction for charitable contributions in 2015? $11,000 $7,000 $12,000 None of the above $5,000 Feedback Rationale: $22,000 x 50% Incorrect Question 32 0 / 2 ptsWeber resides in a state that imposes a tax on income. The following information relating to Weber's state income taxes is available: State income taxes withheld in 2015 $3,000 Refund received in 2015 of 2014 tax $ 300 Assessment paid in 2015 of 2013 tax $ 800 Assuming he elects to deduct state and local income taxes, what amount should Weber use as state and local income taxes in calculating itemized deductions for his 2015 Federal income tax return? $3,800 $3,500 $2,700 $3,000 None of the above Feedback Rationale: $3,000 + $800 Question 33 2 / 2 pts Which of the following is correct for Qualified Tuition Programs for 2015? Contributions are not deductible and qualified educational expense distributions are tax­free. Contributions are not deductible and qualified educational expense distributions are taxable. Contributions are deductible and qualified educational expense distributions are tax­free.Contributions are deductible and qualified educational expense distributions are taxable. Question 34 2 / 2 pts Which of the following is not deductible as a medical expense on Schedule A? Payments for psychiatric care Payments for dentures Payments for marriage counseling Payments to a nurse All of the above are deductible as medical expenses Question 35 2 / 2 pts If an employer makes a contribution to a qualified retirement plan on behalf of an employee, the amount is currently deductible by the employer, and the employee must include the amount in gross income at the time the contribution is made. False True Feedback Rationale: Employers may claim a deduction in the current year for contributions to qualified retirement plans on the employees’ behalf, while the employees do not include the contributions in income until the contributed amounts are distributed.Incorrect Question 36 0 / 2 pts Selma owns a beach cottage that she rents to tourists. In 2015 she rented the cottage for 180 days. What is the maximum number of days Selma can use the cottage before her expense deduction will be limited to her gross rental income? 18 days 0 days 14 days 9 days Question 37 2 / 2 pts Which of the following is a miscellaneous itemized deduction? Casualty losses Property taxes Auto registration fees Job hunting expenses Incorrect Question 38 0 / 2 pts Stan, a single taxpayer, has $1,700 of state income taxes withheld from his wages in the current year. In the current year, he also received a $320 refund on his prior year state income tax. Stan did not itemize last year but he intends to do so this year. Stan used the sales tax estimate tables and determined his sales tax deduction amount is $1,600. What amount should Stan deduct for state taxes? $1,700$1,600 None of the above $1,380 $0 Feedback Rationale: Taxpayers are eligible for the greater of their state income taxes paid or the state sales and use tax paid. Because a state income tax refund would be includable in gross income (not serve as a reduction of the current year state income tax deduction), Stan’s state income tax deduction amount is $1,700 while his sales tax amount is $1,600. He may deduct the greater of the two. As an aside, because Stan did not itemize last year, his refund is not includable in income in the current year.[This question contemplates the extension of the sales tax deduction into 2015] Question 39 2 / 2 pts Denice is divorced and files a single tax return claiming her two children, ages 7 and 9, as dependents. Her AGI for 2015 is $81,500. Denice's child tax credit for 2015 is: $1,650 $2,000 $350 $1,000 $0 Feedback Rationale: (2 × $1,000) – [($81,500 ­ $75,000) / $1,000 rounded up to the nearest whole number × $50] Question 40 2 / 2 ptsJean’s employer has an accountable plan for reimbursing employee expenses. Jean is reimbursed for $1,500 of business travel and $500 for various business subscriptions and professional dues. The $2,000 reimbursement should be treated as follows: Income to Jean and a corresponding miscellaneous deduction for Jean, subject to the 2 percent of AGI floor No taxable income should be reported to Jean $2,000 of income to Jean should be reported $500 of income should be reported to Jean Question 41 2 / 2 pts Choose the incorrect statement. Almost all individuals file tax returns using a calendar year accounting period. An individual may request IRS approval to change to a fiscal year­end basis if certain conditions are met. The choice to file on a fiscal year­end basis must be made with an initial tax return. Books and records may be kept on a different year­end basis than the year­end used for tax purposes. Incorrect Question 42 0 / 2 pts Which of the following statements is false about health savings acounts (HSAs)?Taxpayers qualifying for Medicare do not qualify to make HSA contributions. Distributions from HSAs which are used for qualifying medical expenses are not subject to tax or penalty. HSAs must be paired with qualifying high­deductible health insurance. Distributions from HSAs which are not used for medical expenses are generally subject to a 20 percent penalty and income taxes. Contributions to HSAs are deductible as itemized medical deductions. Question 43 2 / 2 pts During the current year, Seth, a self­employed individual, paid the following taxes: Federal income tax $5,000 State income tax $2,500 Real estate taxes on land in South America (held as an investment) $ 1,000 Personal property taxes based upon value $ 1,500 Federal self­employment tax $ 800 What amount can Seth claim as an itemized deduction for taxes paid during the current year, assuming he elects to deduct state and local income taxes? $5,000 $2,400 $4,200 $3,300 None of the aboveFeedback Rationale: $2,500 + $1,000 + $1,500 Question 44 2 / 2 pts Which one of the following may not be depreciated using an accelerated method? A computer used strictly for the farming business A farming tractor A farm truck that is operated for personal use more than 50 percent of the time A corn­husking machine All of the above items may be depreciated using an accelerated method Question 45 2 / 2 pts Which of the common deductions below are allowed for both regular tax purposes and for AMT purposes? Miscellaneous itemized deductions taken on Schedule A State income taxes, property taxes, and all other taxes deducted on Schedule A Mortgage interest from the acquisition of a residence costing less than $1 million Personal and dependency exemptions The standard deductionIncorrect Question 46 0 / 2 pts Phillip and Naydeen Rivers are married with two dependent children. The family has household income of $38,160 in 2015. They paid $11,000 for health care for the year. A designated silver plan would have cost $9,800. What is the Rivers' premium tax credit? $8,098 $0 $1,413 $9,800 $8,387 Feedback Rationale: $38,160 / $23,850 = 160% of Federal poverty level making the applicable percentage 4.46%. $38,160 x 4.46% = $1,702. $9,800 ­ $1,702 = $8,098 Question 47 2 / 2 pts Taxpayers choosing the election to expense: May expense a $125,000 automobile so long as it is used 100 percent for business. May not carry over any amounts elected which are not allowed because of taxable income limitations. May depreciate the amount of the asset cost that exceeds the amount allowed under the election to expense. Will have the maximum that can be expensed under the election reduced by $0.50 for each dollar by which the cost of the asset acquired exceeds a specified limit.Question 48 2 / 2 pts Monica has a Roth IRA to which she contributed $15,000. The IRA has a current value of $37,500. She is 54 years old and takes a distribution of $25,000. How much of the distribution will be taxable to Monica? $15,000 $0 $25,000 $37,500 $10,000 Feedback Rationale: $25,000 ­ $15,000 Question 49 2 / 2 pts Warren invested in a limited partnership tax shelter in 2002. During 2015, his losses from the partnership amount to $100,000. If Warren has no passive income, what is the amount of Warren's deduction for passive losses for 2015? $40,000 $20,000 $0 $10,000 None of the aboveQuestion 50 2 / 2 pts Matthew purchases a new principal residence in the current year and pays points of $2,000 to obtain a mortgage loan. What is the proper tax treatment for the points paid? The points must be amortized over the life of the loan. The points are a nondeductible personal expense. The points are fully deductible in the current year. The points must be capitalized into the cost of the residence. The points must be amortized over 5 years.