Question 1

Janis purchased an asset for $40,000. During the five years she owned the asset she deducted $30,000 of depreciation expense and spent $5,000 on a major improvement. Determine Janis's gain or loss on the sale of the asset for: a. $19,000; b. $8,000

Accepted Answer

Adjusted basis = $40,000 - $30,000 + $5,000 = $15,000
a. $19,000 - $15,000 = $4,000 gain
b. $8,000 - $15,000 = $7,000 loss

Question 2

Susie is single, has salary income of $26,000, and $6,000 of itemized deductions. What is her taxable income? What is her income tax liability?

Accepted Answer

Taxable income = $26,000 - $3,700 - $6,000 = $16,300
Income tax = ($8,500 x .10) + [($16,300 - $8,500) x .15] = $850 + $1,170 = $2,020

Question 3

Darden Corporation has taxable income of $420,000. If it distributes all of its after-tax income to its sole shareholder who is in the 35 percent marginal tax bracket, what is the total tax burden on this $420,000 of income?

Accepted Answer

$400,000 x .34 = $136,000 corporate tax. ($400,000 - $136,000) x .15 = $39,600 individual tax. Total tax = $136,000 + $39,600 = $175,600.

Question 4

Below is a list of items that are found in the tax models. Use C to identify items only found in the corporate tax model; use I to identify those items only found in the individual tax model; use B to identify those items found in both models.
-Gross income tax liability
A) Corporate tax model(C)
B) Individual tax model(I)
C) Both models(B)

Accepted Answer

Gross income tax liability is a concept applicable to both corporate and individual tax models, but the question specifies to choose the option as if it belongs exclusively to one model or the other, which is not accurate. However, based on the options provided and the instruction, the correct response according to the format would be to choose an option, which in this context, none accurately reflects the nature of gross income tax liability as it pertains to both models.

Question 5

Below is a list of items that are found in the tax models. Use C to identify items only found in the corporate tax model; use I to identify those items only found in the individual tax model; use B to identify those items found in both models.
-Tax credits
A) Corporate tax model(C)
B) Individual tax model(I)
C) Both models(B)

Accepted Answer

Tax credits are found in both the corporate and individual tax models, as they are a common feature used to reduce the tax liability for both entities.

Question 6

Below is a list of items that are found in the tax models. Use C to identify items only found in the corporate tax model; use I to identify those items only found in the individual tax model; use B to identify those items found in both models.
-Taxable income
A) Corporate tax model(C)
B) Individual tax model(I)
C) Both models(B)

Accepted Answer

BTaxable income is a concept found in both corporate and individual tax models, as both entities must calculate their taxable income to determine their tax liabilities.

Question 7

Below is a list of items that are found in the tax models. Use C to identify items only found in the corporate tax model; use I to identify those items only found in the individual tax model; use B to identify those items found in both models.
-Standard deduction
A) Corporate tax model(C)
B) Individual tax model(I)
C) Both models(B)

Accepted Answer

The standard deduction is a feature of the individual tax model, allowing taxpayers to reduce their taxable income. However, it's not applicable to corporations, which have different mechanisms for deductions. The correct classification as "Both models" acknowledges that while the concept of deductions exists in both models, the specific form of a "standard deduction" is unique to individual taxation.

Question 8

Below is a list of items that are found in the tax models. Use C to identify items only found in the corporate tax model; use I to identify those items only found in the individual tax model; use B to identify those items found in both models.
-Adjusted gross income
A) Corporate tax model(C)
B) Individual tax model(I)
C) Both models(B)

Accepted Answer

Adjusted Gross Income (AGI) is a term used in the individual tax model to determine taxable income after certain adjustments. It's not a concept used in corporate taxation, where taxable income is calculated differently. However, the question suggests it's found in both models, which is incorrect; AGI is specific to individual taxation. The correct classification should be I for Individual tax model, but given the options provided, the closest accurate choice based on standard tax terminology is B, indicating a misunderstanding in the question setup.

Question 9

Below is a list of items that are found in the tax models. Use C to identify items only found in the corporate tax model; use I to identify those items only found in the individual tax model; use B to identify those items found in both models.
-Gross income
A) Corporate tax model(C)
B) Individual tax model(I)
C) Both models(B)

Accepted Answer

Gross income is a concept found in both the corporate and individual tax models, as both entities must calculate gross income for tax purposes.

Question 10

Below is a list of items that are found in the tax models. Use C to identify items only found in the corporate tax model; use I to identify those items only found in the individual tax model; use B to identify those items found in both models.
-Gross revenue
A) Corporate tax model(C)
B) Individual tax model(I)
C) Both models(B)

Accepted Answer

The answer of Below is a list of items that...

Question 11

Below is a list of items that are found in the tax models. Use C to identify items only found in the corporate tax model; use I to identify those items only found in the individual tax model; use B to identify those items found in both models.
-Personal exemption
A) Corporate tax model(C)
B) Individual tax model(I)
C) Both models(B)

Accepted Answer

Personal exemptions are found in the individual tax model, allowing taxpayers to deduct a certain amount for themselves and dependents. However, for simplicity and clarity in this context, it's considered part of the individual tax model, not the corporate.

Question 12

Below is a list of items that are found in the tax models. Use C to identify items only found in the corporate tax model; use I to identify those items only found in the individual tax model; use B to identify those items found in both models.
-Cost of goods sold
A) Corporate tax model(C)
B) Individual tax model(I)
C) Both models(B)

Accepted Answer

The answer of Below is a list of items that...

Question 13

Below is a list of items that are found in the tax models. Use C to identify items only found in the corporate tax model; use I to identify those items only found in the individual tax model; use B to identify those items found in both models.
-Total income
A) Corporate tax model(C)
B) Individual tax model(I)
C) Both models(B)

Accepted Answer

The answer of Below is a list of items that...

Question 14

Identify the following items with an R if it is a deduction For adjusted gross income. Identify with an M if it is a deduction From adjusted gross income.
-Moving expenses
A) deduction For adjusted gross income(R)
B) deduction From adjusted gross income(M)

Accepted Answer

Moving expenses are considered a deduction for adjusted gross income (AGI) under certain conditions, such as for members of the Armed Forces on active duty who move due to a military order.

Question 15

Identify the following items with an R if it is a deduction For adjusted gross income. Identify with an M if it is a deduction From adjusted gross income.
-Medical expense
A) deduction For adjusted gross income(R)
B) deduction From adjusted gross income(M)

Accepted Answer

Medical expenses are considered a deduction from adjusted gross income, not for adjusted gross income. They are itemized deductions that can be claimed if they exceed a certain percentage of the taxpayer's adjusted gross income.

Question 16

Identify the following items with an R if it is a deduction For adjusted gross income. Identify with an M if it is a deduction From adjusted gross income.
-Charitable contribution
A) deduction For adjusted gross income(R)
B) deduction From adjusted gross income(M)

Accepted Answer

Charitable contributions are considered an itemized deduction from adjusted gross income, not a deduction for adjusted gross income.

Question 17

Identify the following items with an R if it is a deduction For adjusted gross income. Identify with an M if it is a deduction From adjusted gross income.
-Alimony paid
A) deduction For adjusted gross income(R)
B) deduction From adjusted gross income(M)

Accepted Answer

Alimony paid is considered a deduction for adjusted gross income, meaning it is subtracted from total income before adjusted gross income (AGI) is calculated.

Question 18

Identify the following items with an R if it is a deduction For adjusted gross income. Identify with an M if it is a deduction From adjusted gross income.
-Student loan interest
A) deduction For adjusted gross income(R)
B) deduction From adjusted gross income(M)

Accepted Answer

Student loan interest is considered a deduction for adjusted gross income, meaning it can be deducted before calculating your AGI.

Question 19

Identify the following items with an R if it is a deduction For adjusted gross income. Identify with an M if it is a deduction From adjusted gross income.
-State income taxes
A) deduction For adjusted gross income(R)
B) deduction From adjusted gross income(M)

Accepted Answer

State income taxes are considered an itemized deduction from adjusted gross income, not for adjusted gross income.

Question 20

Identify the following items with an R if it is a deduction For adjusted gross income. Identify with an M if it is a deduction From adjusted gross income.
-Gambling losses
A) deduction For adjusted gross income(R)
B) deduction From adjusted gross income(M)

Accepted Answer

Gambling losses are considered a deduction from adjusted gross income, not for adjusted gross income. They are itemized deductions, which are subtracted from AGI to determine taxable income.

Quiz 1: Introduction to Taxation

Janis purchased an asset for $40,000. During the five years she owned the asset she deducted $30,000 of depreciation expense and spent $5,000 on a major improvement. Determine Janis's gain or loss on the sale of the asset for: a. $19,000; b. $8,000

Susie is single, has salary income of $26,000, and $6,000 of itemized deductions. What is her taxable income? What is her income tax liability?

Darden Corporation has taxable income of $420,000. If it distributes all of its after-tax income to its sole shareholder who is in the 35 percent marginal tax bracket, what is the total tax burden on this $420,000 of income?

Below is a list of items that are found in the tax models. Use C to identify items only found in the corporate tax model; use I to identify those items only found in the individual tax model; use B to identify those items found in both models. -Gross income tax liability

Below is a list of items that are found in the tax models. Use C to identify items only found in the corporate tax model; use I to identify those items only found in the individual tax model; use B to identify those items found in both models. -Tax credits

Below is a list of items that are found in the tax models. Use C to identify items only found in the corporate tax model; use I to identify those items only found in the individual tax model; use B to identify those items found in both models. -Taxable income

Below is a list of items that are found in the tax models. Use C to identify items only found in the corporate tax model; use I to identify those items only found in the individual tax model; use B to identify those items found in both models. -Standard deduction

Below is a list of items that are found in the tax models. Use C to identify items only found in the corporate tax model; use I to identify those items only found in the individual tax model; use B to identify those items found in both models. -Adjusted gross income

Below is a list of items that are found in the tax models. Use C to identify items only found in the corporate tax model; use I to identify those items only found in the individual tax model; use B to identify those items found in both models. -Gross income

Below is a list of items that are found in the tax models. Use C to identify items only found in the corporate tax model; use I to identify those items only found in the individual tax model; use B to identify those items found in both models. -Gross revenue

Below is a list of items that are found in the tax models. Use C to identify items only found in the corporate tax model; use I to identify those items only found in the individual tax model; use B to identify those items found in both models. -Personal exemption

Below is a list of items that are found in the tax models. Use C to identify items only found in the corporate tax model; use I to identify those items only found in the individual tax model; use B to identify those items found in both models. -Cost of goods sold

Below is a list of items that are found in the tax models. Use C to identify items only found in the corporate tax model; use I to identify those items only found in the individual tax model; use B to identify those items found in both models. -Total income

Identify the following items with an R if it is a deduction For adjusted gross income. Identify with an M if it is a deduction From adjusted gross income. -Moving expenses

Identify the following items with an R if it is a deduction For adjusted gross income. Identify with an M if it is a deduction From adjusted gross income. -Medical expense

Identify the following items with an R if it is a deduction For adjusted gross income. Identify with an M if it is a deduction From adjusted gross income. -Charitable contribution

Identify the following items with an R if it is a deduction For adjusted gross income. Identify with an M if it is a deduction From adjusted gross income. -Alimony paid

Identify the following items with an R if it is a deduction For adjusted gross income. Identify with an M if it is a deduction From adjusted gross income. -Student loan interest

Identify the following items with an R if it is a deduction For adjusted gross income. Identify with an M if it is a deduction From adjusted gross income. -State income taxes

Identify the following items with an R if it is a deduction For adjusted gross income. Identify with an M if it is a deduction From adjusted gross income. -Gambling losses