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Tax Final exam Actual Questions and Answers Verified by Expert
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Tax Final exam Actual Questions and Answers Verifiedby Expert 2024-2025
Which of the following statements about the inclusion of boot in a nontaxable exchange is
false? - precise answers>>>The purpose of including boot in a nontaxable exchange is to
equalize the adjusted tax bases of the properties exchanged.
Which of the following statements regarding a partner's tax basis in a partnership interest is
true? - precise answers>>>Partnership tax basis is reduced by the partner's share of
nondeductible partnership expenses.
Johnson Incorporated and C&K Company entered into an exchange of real property. Here is the
information for the properties to be exchanged.
JohnsonC&KFMV$ 900,000$ 675,000Adjusted tax basis593,000462,000Mortgage200,000-0-
Pursuant to the exchange, C&K paid $25,000 cash to Johnson and assumed the mortgage on the
Johnson property. Compute C&K's gain recognized on the exchange and its tax basis in the
property received from Johnson. - precise answers>>>None of these choices are correct.
On January 21, 2010, Andy purchased 350 shares of Baker common stock for $24,500. On
November 13, 2021, he sold the 350 shares for $7,250. On December 1, 2021, Andy purchased
350 shares of Baker common stock for $8,000. What is Andy's basis in these shares? - precise
answers>>>$25,250
Which of the following statements regarding S corporations is true? - precise answers>>>An S
corporation may have only one class of stock.
In its current tax year, PRS Corporation generated $300,000 ordinary income from the
performance of consulting services for its clients. PRS sold two assets, recognizing a $20,000
gain on the first sale and a $31,000 loss on the second sale. Which of the following statements
is false? - precise answers>>>If the gain was capital gain and the loss was ordinary, PRS's
taxable income was $269,000.
,Mr. and Mrs. Lansing, who file a joint tax return, have four dependent children under age 17.
Which of the following statements is false?V - precise answers>>>None of these choices are
false.
Meraleigh, age 16, is claimed as a dependent on her parents' tax return. This year, Meraleigh
earned $510 from babysitting and $220 interest income from a savings account. Compute
Meraleigh's standard deduction. - precise answers>>>$730
Several years ago, Y&S Incorporated purchased a patent on a production process for $250,000
and has amortized $91,000 of the cost. Y&S has learned that a rival company recently
developed a new process that renders the patent worthless. Consequently, Y&S made a public
announcement that it would no longer enforce the patent. What is the tax consequence to Y&S
of this unfortunate situation? - precise answers>>>$159,000 ordinary abandonment loss.
Forward Incorporated's book income of $739,000 includes a net long-term capital loss of
$42,000 and charitable contribution of $170,000. Taxable income shown on the Schedule M-1
would be: - precise answers>>>$855,900
Hay, Straw and Clover formed the HSC Partnership, agreeing to share profits and losses equally.
Clover will manage the business for which he will receive a guaranteed payment of $30,000 per
year. Cash receipts and disbursements for the year were as follows
Net income from operations (before guaranteed payment)$ 90,000Guaranteed payment to
Clover30,000
What is Clover's share of the partnership's ordinary income and guaranteed payment? - precise
answers>>>Ordinary income, $20,000; Guaranteed payment, $30,000.
George and Martha formed a partnership by each contributing $5,000 cash. The partnership
then borrowed another $60,000 to finance its operations. If George and Martha are both
general partners, compute each partner's basis in his/her partnership interest. - precise
answers>>>$35,000
, In April, vandals completely destroyed outdoor signage owned by Renfru Incorporated Renfru's
adjusted tax basis in the signage was $31,300. Renfru received a $50,000 reimbursement from
its property insurance company, and on August 8, it paid $60,000 to replace the signage.
Compute Renfru's recognized gain on loss on the involuntary conversion and its tax basis in the
new signage. - precise answers>>>None of these choices are correct
Nixon Incorporated transferred Asset A to an unrelated party in exchange for Asset Z and
$15,750 cash. Nixon's tax basis in Asset A was $400,000, and Asset Z had a $510,000 appraised
FMV. Which of the following statements is true? - precise answers>>>If Asset A and Asset Z are
like-kind property, Nixon recognizes a $15,750 gain and takes a $400,000 basis in Asset Z.
Mr. Eddy loaned his solely-owned corporation $3,000,000. The corporation paid a market rate
of interest annually. Upon audit, the IRS reclassified some of the debt as equity. Which of the
following statements is true? - precise answers>>>The interest paid by the corporation on the
reclassified amount is treated as a dividend.
Palm Corporation has book income of $424,000. Book income reflects $130,000 federal income
tax expense and $55,000 depreciation expense. Tax depreciation expense computed under
MACRS is $65,000. Palm received $25,000 of prepaid rent not included in book income. Based
only on these items, compute Palm's taxable income. - precise answers>>>$569,000
Babex Incorporated and OMG Company entered into an exchange of real property. Here is the
information for the properties to be exchanged.
BabexOMGFMV$ 1,000,000$ 825,000Adjusted tax basis768,000514,500Mortgage175,000-0-
Pursuant to the exchange, OMG assumed the mortgage on the Babex property. Compute
Babex's gain recognized on the exchange and its tax basis in the property received from OMG. -
precise answers>>>$175,000 gain recognized; $768,000 basis in OMG property.
Fleet, Incorporated owns 85% of the stock of Pete, Incorporated and 35% of the stock of Zete,
Incorporated and 90% of the stock of Bete, Incorporated Bete owns 5% of the stock of Pete and
5% of the stock of Zete. Zete owns 10% of the stock of Bete. The remaining stock of Pete and
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