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Margie Purchased One New Asset During The Year On November 10, 2006

21.     Margie purchased one new asset...

21.     Margie purchased one new asset during the year (five-year property) on November 10, 2006, at a cost of $417,000. She made the § 179 election. The income from the business before the cost recovery deduction and the § 179 deduction was $75,000. Determine the total deductions with respect to the asset for 2006.
a.     $75,000.
b.     $100,000.
c.     $169,050.
d.     $264,050.

e.     None of the above.

22.     In 2005, Gail had a § 179 deduction carryover of $15,000. In 2006, she elected § 179 for an asset acquired at a cost of $10,000. Gail's § 179 business income limitation for 2006 is $20,000. Determine Gail's § 179 deduction for 2006.
a.     $10,000.
b.     $15,000.
c.     $20,000.
d.     $24,000.
e.     None of the above.

23.     On March 10, 2006, Pearl Corporation acquires a new business asset (five-year property) for $110,000. The corporation elects to expense the maximum amount under § 179. Determine the total deductions in calculating taxable income related to the business asset for 2006 assuming Pearl has taxable income of $107,000 before the deduction for cost recovery and the § 179 expense.
a.     $6,000.
b.     $100,000.
c.     $106,800.
d.     $107,000.
e.     None of the above.

24.     Wyatt performs services for Abby. Which, if any, of the following factors indicate that Wyatt is an employee (rather than an independent contractor)?
a.     Wyatt sets his own work schedule.
b.     Wyatt is paid by the number of units he produces.
c.     Abby furnishes the tools Wyatt uses.
d.     Abby does not supervise Wyatt's work.
e.      None of the above.

25.     Michael is the city sales manager for “Chick-Stick,” a national fast food franchise. Every working day, Michael drives his car as follows:       
     Miles       
     Home to office     20
     Office to Chick-Stick No. 1     15
     Chick-Stick No. 1 to No. 2     18
     Chick-Stick No. 2 to No. 3     14
     Chick-Stick No. 3 to home     30

Michael's deductible mileage is:
a.     0 miles.
b.     30 miles.
c.     47 miles.
d.     77 miles.
e.          None of the above.

26.     No deduction is allowed for the participant's contribution, but distributions from the plan are not subject to income tax. This statement describes the operation of:
a.     Roth IRAs.
b.     Keogh (H.R. 10) plans.
c.     Traditional IRAs.
d.     Both a. and b., but not c.
e.    Both b. and c., but not a.

27.     Edna had an accident while competing in a rodeo. She sustained facial injuries that required cosmetic surgery. While having the surgery done to restore her appearance, she had additional surgery done to reshape her chin, which was not injured in the accident. The surgery to restore her appearance cost $9,000 and the surgery to reshape her chin cost $6,000. How much of Edna's surgical fees will qualify as a deductible medical expense (before application of the 7.5% limitation)?
a.     $0.
b.     $6,000.
c.     $9,000.
d.     $15,000.
e.     None of the above.

28.     Larry and Beth are married and together have AGI of $80,000 in 2006. They have two dependents and file a joint return. They pay $3,000 for a high deductible health insurance policy and they contribute $2,400 to a qualified Health Savings Account. During the year, they paid the following amounts for medical care: $7,500 in doctor and dentist bills and hospital expenses, and $1,700 for prescribed medicine and drugs. In November 2006, they received an insurance reimbursement of $2,100 for hospitalization. They expect to receive an additional reimbursement of $1,000 in January 2005. Determine the maximum deduction allowable for medical expenses in 2006.
a.     $4,100.
b.     $6,100.
c.     $7,100.
d.     $10,100.
e.     None of the above.

29.     Rosita is employed as a systems analyst. For calendar year 2006, she had AGI of $120,000 and paid the following medical expenses:
     Medical insurance premiums     $3,900
     Doctor and dentist bills for Jose     
     and Carmen (Rosita's parents)     8,250
     Doctor and dentist bills for Rosita     6,750
     Prescribed medicines for Rosita     300
     Nonprescribed insulin for Rosita     825

Jose and Carmen would qualify as Rosita's dependents except that they file a joint return. Rosita's medical insurance policy does not cover them. Rosita filed a claim for $3,150 of her own expenses with her insurance company in December 2006 and received the reimbursement in January 2007. What is Rosita's maximum allowable medical expense deduction for 2006?
a.     $2,775.
b.     $11,025.
c.     $17,325.
d.     $17,775.
e.     None of the above.

30.     In Shelby County, the real property tax year is the calendar year. The real property tax becomes a personal liability of the owner of real property on January 1 in the current real property tax year, 2006. The tax is payable on June 1, 2006. On April 30, 2006, Julio sells his house to Anita for $230,000. On June 1, 2006, Anita pays the entire real estate tax of $7,320 for the year ending December 31, 2006. How much of the property taxes may Julio deduct?
a.     $0.
b.     $2,400.
c.     $2,407.
d.     $4,920.
e.     None of the above.

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Answered in 1 hour by:
2/26/2007
RD
RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8,784
Experience: CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
Verified
21. Margie purchased one new asset during the year (five-year property) on November 10, 2006, at a cost of $417,000. She made the § 179 election. The income from the business before the cost recovery deduction and the § 179 deduction was $75,000. Determine the total deductions with respect to the asset for 2006.
a. $75,000.
b. $100,000.
c. $169,050.
d. $264,050.
e. None of the above.

22. In 2005, Gail had a § 179 deduction carryover of $15,000. In 2006, she elected § 179 for an asset acquired at a cost of $10,000. Gail's § 179 business income limitation for 2006 is $20,000. Determine Gail's § 179 deduction for 2006.
a. $10,000.
b. $15,000.
c. $20,000.
d. $24,000.
e. None of the above.

23. On March 10, 2006, Pearl Corporation acquires a new business asset (five-year property) for $110,000. The corporation elects to expense the maximum amount under § 179. Determine the total deductions in calculating taxable income related to the business asset for 2006 assuming Pearl has taxable income of $107,000 before the deduction for cost recovery and the § 179 expense.
a. $6,000.
b. $100,000.
c. $106,800.
d. $107,000.
e. None of the above.

24. Wyatt performs services for Abby. Which, if any, of the following factors indicate that Wyatt is an employee (rather than an independent contractor)?
a. Wyatt sets his own work schedule.
b. Wyatt is paid by the number of units he produces.
c. Abby furnishes the tools Wyatt uses.
d. Abby does not supervise Wyatt's work.
e. None of the above.

25. Michael is the city sales manager for "Chick-Stick," a national fast food franchise. Every working day, Michael drives his car as follows:

Miles

Home to office 20
Office to Chick-Stick No. 1 15
Chick-Stick No. 1 to No. 2 18
Chick-Stick No. 2 to No. 3 14
Chick-Stick No. 3 to home 30

Michael's deductible mileage is:
a. 0 miles.
b. 30 miles.
c. 47 miles.
d. 77 miles.
e. None of the above.

26. No deduction is allowed for the participant's contribution, but distributions from the plan are not subject to income tax. This statement describes the operation of:
a. Roth IRAs.
b. Keogh (H.R. 10) plans.
c. Traditional IRAs.
d. Both a. and b., but not c.
e. Both b. and c., but not a.

27. Edna had an accident while competing in a rodeo. She sustained facial injuries that required cosmetic surgery. While having the surgery done to restore her appearance, she had additional surgery done to reshape her chin, which was not injured in the accident. The surgery to restore her appearance cost $9,000 and the surgery to reshape her chin cost $6,000. How much of Edna's surgical fees will qualify as a deductible medical expense (before application of the 7.5% limitation)?
a. $0.
b. $6,000.
c. $9,000.
d. $15,000.
e. None of the above.

28. Larry and Beth are married and together have AGI of $80,000 in 2006. They have two dependents and file a joint return. They pay $3,000 for a high deductible health insurance policy and they contribute $2,400 to a qualified Health Savings Account. During the year, they paid the following amounts for medical care: $7,500 in doctor and dentist bills and hospital expenses, and $1,700 for prescribed medicine and drugs. In November 2006, they received an insurance reimbursement of $2,100 for hospitalization. They expect to receive an additional reimbursement of $1,000 in January 2005. Determine the maximum deduction allowable for medical expenses in 2006.
a. $4,100.
b. $6,100.
c. $7,100.
d. $10,100.
e. None of the above.

29. Rosita is employed as a systems analyst. For calendar year 2006, she had AGI of $120,000 and paid the following medical expenses:

Medical insurance premiums $3,900
Doctor and dentist bills for Jose
and Carmen (Rosita's parents) 8,250
Doctor and dentist bills for Rosita 6,750
Prescribed medicines for Rosita 300
Nonprescribed insulin for Rosita 825

Jose and Carmen would qualify as Rosita's dependents except that they file a joint return. Rosita's medical insurance policy does not cover them. Rosita filed a claim for $3,150 of her own expenses with her insurance company in December 2006 and received the reimbursement in January 2007. What is Rosita's maximum allowable medical expense deduction for 2006?
a. $2,775.
b. $11,025.
c. $17,325.
d. $17,775.
e. None of the above.

30. In Shelby County, the real property tax year is the calendar year. The real property tax becomes a personal liability of the owner of real property on January 1 in the current real property tax year, 2006. The tax is payable on June 1, 2006. On April 30, 2006, Julio sells his house to Anita for $230,000. On June 1, 2006, Anita pays the entire real estate tax of $7,320 for the year ending December 31, 2006. How much of the property taxes may Julio deduct?
a. $0.
b. $2,400.
c. $2,407.
d. $4,920.
e. None of the above. (should be $2440)
RD
RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8,784
Experience: CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
Verified
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RD
RD
RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8,784
8,784 Satisfied Customers
Experience: CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..

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