WGU C239 Exam Problems | 110 Questions with 100% Correct Answers | Verified | Latest Update
Angel has an AGI of $85,000 without considering the sale of a nondepreciable asset for $35,000. The asset was acquired five y
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WGU C239 Exam Problems | 110 Questions with 100% Correct Answers | Verified | Latest Update
Angel has an AGI of $85,000 without considering the sale of a nondepreciable asset for $35,000. The asset was acquired five years ago and has an adjusted basis of $50,000. She has no other sales or exchanges.
Determine Angel's AGI for the following independent situations when the asset is:
A capital asset § 1231 asset -✔✔ 82,000 - 70,000
A owns invest land with an adjusted bases of 50000 FMV of 70000 subject to a mortgage of 15000. B owns investment land with an adjusted basis of 60000 FMV of 65000 subject to a mortgage of 10000, A and B exchange real estate investments What are there gain and basis -✔✔ A
Gain-20000
Recognized-5000
Basis-50000
B
Gain -5000
Recognized -0
Basis -65000
What is the default tax classification for a LLC? -✔✔ Partnership, Form 1065
MacDonald Consulting, LLC is expected to earn $300,000 in annual profits. The LLC is owned equally by four people who have other substantial income and will not need their profits for many years.
What is the appropriate tax-minimizing entity classification decision for this business? -✔✔ C Corporation
What is optimal tax planning? -✔✔ Maximizing after-tax cash flows
A Personal Service Corporation (PSC) reports taxable income of $300,000.
A Personal Service Corporation is taxed at 35%.
What is the PSC's regular tax liability? -✔✔ $105,000
Beginning in 2013, higher-income taxpayers' itemized deductions are reduced.
What is the maximum percentage higher-income taxpayers' itemized deductions are reduced -✔✔ 80%
Art, a sole proprietor operates Cherry Farms.
Which schedule should he use to individually report the profit or loss from farming? -✔✔ Form 1040 Schedule F, Profit or Loss From Farming
An individual received retirement benefits of $15,000, of which $12,000 was deposited into a savings account. The remaining $3,000 was spent on food, clothing, medical and dental care.
How much support must the individual receive from his child for him to be classified as a dependent on his child's taxes? -✔✔ More than $ 3,000
An individual owns 60% of a CPA firm. The partnership sustained total operating losses of $80,000 in the current tax year, and the basis in the partnership is adequate to sustain the loss.
What is the amount of the individual's recognized loss for the current tax year? -✔✔ ($48,000)
An individual is considering alternative organizational forms for his business. The business net earnings are $200,000.
The owner is single and has $10,000 of income from other sources and personal itemized deductions of $16,000. Compensation for services is $85,000. Business charitable contributions are $5,000. Owner's dividends are $20,000.
What will be the owner's taxable income if the business is operated as an C Corporation? -✔✔ 95,050.
An individual is considering alternative organizational forms for his business. The business net earnings are $200,000.
The owner is single and has $10,000 of income from other sources and personal itemized deductions of $16,000. Compensation for services is $85,000. Business charitable contributions are $5,000. Other owner distributions are $20,000.
What will be the owner's taxable income if the business is operated as an S Corporation? -✔✔ 270,050
Roger established a trust for the benefit of his two children. The principal amount of the trust is $300,000 with expected earnings of 10% per year. In the current tax year, the trust earned $30,000 of investment income and had $3,000 of expenses.
What is the trust's taxable income if it distributes $16,000 during the year? -✔✔ $11,000
A taxpayer has $20,000 of short-term capital losses and $10,000 of long-term capital gains.
What amount should the taxpayer report on for capital gains (losses) on the 1040? -✔✔ $(3,000)
Jane, a single taxpayer with one dependent, reports AGI of $302,000. She has $10,000 of home mortgage interest and property taxes, of $6,000.
Her gross itemized deductions of $16,000 are reduced by how much? -✔✔ 80%
Individuals are taxed at which bracket when they receive qualified dividends that are taxed at 0%? -✔✔ Not higher than 15.0.%
Lisa exchanges land subject to a liability of $80,000 for $200,000 of stock owned by Tom Chandler. Her adjusted basis in the land is $146,000.
How much does Lisa realize on the transaction?
What is Lisa's realized gain (loss) on the transaction? -✔✔ 280,000
134,000
Claire owns an apartment building with a $500,000 basis, which is subject to a liability of $200,000. Jane owns an office building with a $700,000 FMV, which is subject to a $175,000 mortgage. They exchange buildings and assume the related liabilities. Claire pays 45,000 cash to Jane in the transaction. -✔✔ 180,000 -25000- 545,000
What is considered a like-kind exchange? -✔✔ Exchange of a computer server for two personal computers by an individual
What is considered a capital asset for tax purposes? -✔✔ Customer list
How is the amount received by the holder treated when a debt instrument is retired? -✔✔ As an exchange of pro
What is the first taxable year in which any part of the gain on an involuntary conversion is realized? -✔✔ They year in which the insurance proceeds are received
The state condemns a taxpayer's bowling alley on may 1, 2012, and in the next year compensates the taxpayer.
What is the last day to replace the bowling alley with like-king property to qualify for non-recognition of gain treatment? -✔✔ December 31, 2016
Jason transfers property with an adjusted basis of $65,000 and a $90,000 FMV in exchange for 800 shares of a newly formed corporation. Jackson donates legal services in exchange for 200 shares of corporation stock, valued at $22,500.
What is the control and gain for both Jason and Jackson? -✔✔ Jason owns 80% of the corporation immediately following the exchange. Section 351 requirements are met. Jason is allowed to defer the $25,000 realized gain.
Jackson owns 20% of the corporation and recognizes $22,500 in ordinary income.
Anastasia transfers property with an adjusted basis of $25,000 and a $33,000 FMV in exchange for 90 shares of the newly formed corporation. The property transferred has a mortgage of $15,000, which the corporation assumed. Nicholas contributes $11,000 in cash in exchange for 20 shares of stock of the corporation. §351 requirements are met.
What are Anastasia's realized and recognized gain? -✔✔ 23,000 - 0
Jeremy performs accounting services FMV of $50,000 to a corporation in exchange for 10% of its stock, FMV of $65,000.
What is the immediate tax consequence to Jeremy? -✔✔ 65000
MacGyver Corporation reports the following information for the current year:
Gross income from operations 1,000,000
Charitable contributions 50,000
Operating expenses 600,000
W-2 wages related to domestic production activity deduction included in operating expenses above are $200,000.
What is the amount of the corporation's domestic production activity deduction? -✔✔ 32,400
Stewart Racing has $850,000 of regular taxable income and $900,000 of alternative minimum tax (AMT) preference items. The company also has $50,000 of positive AMT adjustment items, and $250,000 of negative AMT adjustment items. The company's regular tax liability is $289,000.
What is Stewart's AMT? -✔✔ 21,000
DJTS Motorsports has $300,000 of regular taxable income, and $500,000 of alternative minimum tax (AMT) preference items. The company also has $150,000 of positive AMT adjustment items, and $230,000 of negative AMT adjustment items. The company's regular tax liability is $170,000,
What is DJTS's AMT? -✔✔ 0
Rainbow Company, a personal holding company (PHC), has regular income of $230,000, dividend-received deduction of $35,000, and a net operating loss of $50,000. The PHC pays $15,000 in foreign income taxes and $5,000 in dividends.
What is Rainbow's tax liability if the PHC has a tax rate of 20%? -✔✔
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