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California State University, Los Angeles *

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3210

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Accounting

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Feb 20, 2024

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pdf

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2

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1.Judy is a cash basis attorney. This year, she performed services in connection with the formation of a corporation and received stock with a value of $4,000 for her services. By the end of the year, the value of the stock had decreased to $2,000. She continued to hold the stock. Judy must recognize $4,000 of gross income from the stock for the current year. True False 2. Barney painted his house, which saved him $3,000. According to the realization requirement, Barney must recognize $3,000 of income. True False 3. Nicholas owned stock that decreased in value by $20,000 during the year, but he did not sell the stock. He earned $45,000 salary, but received only $34,000 because $11,000 in taxes were withheld. Nicholas saved $10,000 of his salary and used the remainder for personal living expenses. Nicholas's economic income for the year exceeded his gross income for tax purposes. True False 4. A sole proprietor purchased an asset for $1,000 in 2021. Its value was $1,500 at the end of 2021. In 2022, the taxpayer sold the asset for $1,400. In 2022, the proprietor realized a taxable gain of $400 but an economic loss of $100. True False 5. In December 2020, Adriana collected the December 2020 and January 2021 rent from a tenant. Adriana is a cash basis taxpayer. The amount collected in December 2020 for the 2021 rent should be included in her 2021 gross income. True False
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